“After last week’s impressive rally, the FTSE 100 is refusing to budge on Monday with the index flat at 7,722. This week’s big events include UK unemployment and wage growth figures on Tuesday, Japan’s latest GDP growth figure on Wednesday and full year results from Royal Mail on Thursday,” says AJ Bell Investment Director Russ Mould.
“It is a strange feeling for the loss of 110,000 customers to feel like a positive result. But that is probably the most interesting takeaway from energy provider Centrica’s latest trading update.
“The owner of British Gas has seen customer losses in its UK domestic business slow materially compared with the average for 2017.
“It has faced fierce competition from the multitude of smaller independent operators actively encouraged by UK policy on switching suppliers.
“The extreme weather earlier this year is a bit of a double-edged sword – it boosted energy demand but also led to increased call-out costs.
“The future destiny of the share price is likely to be heavily dictated by the fate of Centrica’s dividend which may hang on planned energy price caps in the UK.”
“Favourable foreign exchange rates have given a boost to many companies on the UK stock market over the past two years, yet that tailwind is now fading away for a lot of stocks.
“Chemicals group Victrex is certainly in this situation, having flagged at its half year results how currencies could turn from a tailwind into a headwind.
“This shift will put the emphasis back of the true health of the underlying operations and the actions Victrex can take to stay competitive.
“The latest results show a business in top shape judging by the strong cash generation, high (and rising) gross margins and impressive group sales volume growth.
“However a shift to currencies being a headwind could threaten the pace of earnings growth and Victrex’s pricing, particularly as one of its rivals (Solvay) has operations in the US which could benefit from foreign exchange rates swinging in its favour.”
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