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“The FTSE 100 extended Monday’s gains with another 0.4% advance to 6,190. European and Asian markets were also in positive territory as investors focused on a global recovery from the coronavirus pandemic,” says Russ Mould, Investment Director at AJ Bell.
“The European STOXX 600 index rose 1.2% to trade at its highest level since 6 March. Lufthansa jumped by more than 7% after the airline’s supervisory board approved a €9 billion government bailout. Real estate group Aroundtown soared by 9.2% after saying it would buy back up to €500 million worth of shares.
“On the currency markets, the pound advanced 0.3% against the US dollar to $1.2524 while gold eased back, falling 0.4% to $1,733 per ounce."
“UK house prices in May fell by the most in more than a decade, according to the latest Nationwide survey. Investors gave a mixed reaction to this news with shares in estate agents rising and housebuilders falling.
“Important to the market is the easing of lockdown restrictions and getting people back to work and children back to school, as these signal a resumption of life as we know it. With both factors now in play, investors appear to be taking the view that any dip in the property market is only a short-term issue, as evident by shares in estate agent Countrywide rising 3.1% on the Nationwide survey news.
“The building society’s survey noted that would-be buyers were planning to wait six months on average before looking to make a housing transaction.
“On one hand, that isn’t a long period to wait from a stock market perspective as investors are now increasingly focused on 2021 earnings.
“Estate agents typically benefit from having lettings business which should be relatively unaffected by the pandemic and which provides some earnings support while they wait for housing transactions to pick up.
“Housebuilders, on the other hand, will not welcome the prospect of would-be buyers waiting until next year which might explain why their shares are weaker on the back of the Nationwide survey.”
“Out with the old and in with the new. When someone takes charge, they will often want to surround themselves with their own team and the incoming CEO at Tesco, Ken Murphy, looks to be no exception. The news that the supermarket’s current finance chief Alan Stewart will step down in 2021 isn’t therefore a big surprise.
“He will depart with a lot of goodwill. After joining from Marks & Spencer in 2014, Stewart, along with chief executive Dave Lewis who leaves at the end of October, was instrumental in repairing the damage wrought by an accounting scandal.
“A finance director, like the referee of a sporting contest, is typically doing a good job if you don’t notice them and Stewart fits the bill on this measure.
“The company is boasting a stronger balance sheet, a better pension position than when he started and has also regained investment grade status for its debt.
“He will leave the business at an interesting juncture with the company facing lots of challenges and opportunities created by the coronavirus crisis.
“The business has had to contend with significant extra costs as it has adapted to the new normal created by the pandemic, while the Brexit issue continues to simmer in the background, yet equally it could benefit as more people shop for groceries online.”
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