The Review

25 June 2013

Our regular look at the markets making the headlines, using our market insight information and client sentiment data.

By Chris Beauchamp, IG Market Analyst

June has seen the FTSE 100 slump back from the highs of May, with volatility rising around a Federal Reserve meeting that may be key for immediate market direction. Investors had been concerned that improvement in economic data will mean an easing off in the pace of stimulus, and comments from the Fed seem to bear this out. 

Market overview

Volatility returns with a vengence

The FTSE 100 has lost more than 7% since its peak around 6800, with markets undergoing wild swings. The latest Fed meeting showed the world’s most powerful central bank moving towards a reduction in asset purchases. Although the Fed likened any reductions to ‘letting up on the gas pedal’ rather than ‘slamming on the brakes’, markets still took fright, resulting in sharp drops for major indices.

US markets have not suffered as heavily in the recent sell-off as their European counterparts, with the US 500 holding firmly above 1600 during current volatility. The summer is often a weak period for stock markets, and we will see whether indices stay on this track into autumn.

Information as at 6pm 20 June 2013, please see US 500 in market insight for live data.


Fed policy gives dollar strength

The battle of the central banks has been reflected in the movements of USD/JPY of late, with the dollar’s strong run versus the yen seemingly under threat in late May. The currency pair dropped almost 9% from its highs, but has since recovered, with the apparent evolution of Fed policy giving fresh strength to the US dollar.  

Information as at 6pm 20 June 2013, please see USD/JPY in market insight for live data.


Under the spotlight


Hospitality firm Whitbread has remained fairly sheltered from the volatility shaking the broader stock market. The company has been one of the serial strong performers of the post-2008 environment, steadily rising from around 700p in 2009 to almost £30 today. The latest results were able to carry the share price briefly over the £30 level, as the company said that Costa Coffee and Premier Inn were continuing to enjoy strong trading. 

Caution prevails over the outlook as the firm goes through a difficult period compared to the success of the Olympics last year, but overall Whitbread continues to look attractive.

Information as at 6pm 20 June 2013, please see Whitbread in market insight for live data.



Under the spotlight


Another star performer is online clothing company ASOS (As Seen On Screen), which recently hit new all-time highs. Following a surge in sales for the three months leading up to the end of May, ASOS briefly peaked above £42 per share. Total sales were up 45%, with the UK registering a 39% increase and the international division seeing a rise of 48%. 

There doesn’t seem much capable of stopping this online juggernaut just yet, with the tie-up with cheap retailer Primark only boosting its appeal to the cash-strapped British consumer.

Information as at 6pm 20 June 2013, please see ASOS in market insight for live data.




Under the spotlight

W.H. Smith

The share price of W.H. Smith has risen further since the departure of its successful chief executive Kate Swann earlier this year, although the store chain is encountering some difficulties in sales growth. Total sales were down 5% in the 14 weeks since the beginning of March. However, there is reason to be optimistic with new store openings for the travel arm going well, expanding into new sites at railway stations, airports and internationally.

Information as at 6pm 20 June 2013, please see W.H. Smith in market insight for live data.




Looking ahead

The coming week sees key announcements from a number of companies, including online supermarket Ocado, Home Retail, oil gaint Tullow and house builder Taylor Wimpey.

View economic calendar





Information as at 6pm 20 June 2013, please see Ocado, Home Retail, Tullow and Taylor Wimpey in market insight for the latest client sentiment data.

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Source of data: IG market insight. 

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