Market snapshot: UK in focus amid Thanksgiving lull

On a shortened trading day in the US, investor focus remains on problems closer to home.

The Thanksgiving holiday has led to a lacklustre end to the week, with some Asian markets taking centre stage as they reap the benefits of an earlier economic recovery than their counterparts in the West.

The US markets - shut yesterday and on a shortened trading day Friday - will fully resume trading on Monday, with the indices still in positive territory. In the year to date, the Dow Jones is ahead by 4.7%, although slightly off the recent record high, the S&P 500 has added 12.3% and the Nasdaq 35%.

In the meantime, investors will be keen to see how the appetite of the consumer is holding up on both sides of the pond when the results of the Black Friday shopping spree emerge.

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In the UK specifically, attention has switched in the absence of a lead from Wall Street to the state of the nation’s finances. With Brexit negotiations still seemingly in deadlock, and with the words of warning from the Chancellor on economic scarring resulting from the pandemic still ringing in investors’ ears, the outlook for the economy is sombre. Inevitable tax hikes next year and a recovery which is likely to move at a glacial pace both result from the Covid-19 and Brexit double whammy.

The FTSE 100 has given up some of its recent gains following the optimism which pervaded sentiment following the vaccine announcement and remains down by 15.6% in the year to date.

Until the last couple of trading sessions, the FTSE100 reshuffle was shaping up to be a non-event, with no changes to the index for the first time since September 2018. However, a recent dip in the price of home and repair services company Homeserve (LSE:HSV), promoted to the FTSE 100 in June, has seen it fall outside of the 110 companies parameter, which would therefore result in its demotion from the index next week.

This could hand promotion almost by default to budget airline group Wizz Air (LSE:WIZZ), despite the company not appearing in the top 90 stocks by market capitalisation, currently standing at 96th. The company has a particular focus in Central and Eastern Europe and has suffered along with the rest of the industry during the pandemic. As such, a promotion would raise some eyebrows given the performance of the beleaguered airline sector this year, but Wizz Air have bucked the trend with the shares ahead by 17% in the year to date, and having recovered by 120% since the March low.

Any changes will be announced on Wednesday next week, becoming effective 21st December.