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“UK stocks struggled to keep up with the rally in Asian markets on Friday as weakness in the energy sector acted as a drag. The FTSE 100 only managed to nudge 0.1% ahead to 6,246 as a decline in Royal Dutch Shell and BP weighed on the performance of the index,” says Russ Mould, Investment Director at AJ Bell.
“The top risers on the FTSE 100 generally featured the smaller companies in the market cap-weighted index and so they had less of an influence on the overall performance. In index point terms, British American Tobacco and BHP were the biggest drivers of the market’s small advance.
“In Asia, the Shanghai SE Composite index surged by 2% and Hong Kong’s Hang Seng index jumped 1.2% following an improvement in Chinese service sector activity, raising hopes about the strength of China’s economic recovery. The top riser on the Shanghai market was logistics and supply chain services group CTS International whose shares increased by just over 10% in value.
“Pre-market indicative prices point to a small advance in US stocks when North American markets open on Friday, including a 0.4% indicated gain in the S&P 500. This is despite the US experiencing a surge in new coronavirus infections.
“Investors continue to look past the crisis and focus on the earnings recovery potential for companies in 2021 while also fuelling the ferocious rally in tech stocks.”
Land Securities
“Were reports of the demise of traditional commercial property investing premature? The flagged resumption of dividends at Land Securities, which invests mainly in offices and retail assets, suggests they may have been.
“The fact like-for-like sales at its shopping centres were at 80% of their levels a year ago in the two weeks since non-essential retail reopened in England is testament to the resilience of the UK consumer.
“And with 60% of rent due on 24 June paid within five working days the company clearly feels able to pay a dividend of some description alongside first half results in November.
“Notably 81% of rent from office tenants was paid within this window compared with only 29% of retail. This is still a much better income situation than the 16% tally announced by retail property specialist Hammerson earlier in the week.
“The confidence Land Securities has signalled by restarting dividends is also an indication that office assets might prove more durable than feared.
“Some observers had suggested that working from home would reduce demand for office space and have a similar impact on this part of the market as online shopping has had on physical retail.
“The counter argument includes elements like the requirement for more square footage to facilitate social distancing, the fact that working from home will not be possible for everybody and the social benefits of working in an office.”
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