The first summertime recession of the 21st century is set to bring some profound changes to travel trends when it comes to planning this years holiday for many UK households.

With the credit crunch still biting, unemployment rising and the pound still relatively weak against the Euro & the US Dollar, many UK holiday makers look set to abandon their overseas plans, opting instead for a cheap and cheerful holiday at home, or 'staycation'. It would seem even the film industry elite are feeling the pinch with the attendance to this year ’s Cannes Film Festival down 20-30% on last year.

In the 12-month period to March 2009, the number of visits abroad by UK residents decreased by 6 per cent when compared with the 12 months to March 2008, from 70.2 to 66.0 million.*

Looking forward,Sterling is beginning to see an upside from a 12 month low against both the Euro and the US Dollar and we are expecting to see increased numbers of European and American tourists visiting the UK, resulting in an additional boost to the tourism and retail industries here.

But will this be enough to stimulate the UK economy significantly and have a material impact on retail sales figures in the UK or indeed drive up the value of the pound against its European and US counterparts?

If you are interested in tracking the effect of the 'staycation' on the performance of the UK travel and leisure sector then login to our Research Centre, click on 'Stock Tools', go to 'Heat Maps' then choose 'Travel & Leisure' from the drop down list. From there you can track share price movement of all companies in this sector and click through to detailed information on these companies - everything from price data, company fundamentals and Directors Deals to the latest Sharecast news, all available instantly.

You could also look at the performance of individual stocks in this sector. Perhaps you think the 'staycation' might boost cinema visits, in which case you could analyse the share price movement of the likes of Cineworld Group (CINE) over any period from yesterday to the last 5 years using the Heat Maps. Or perhaps you think pubs may benefit? In which case, a stock such as Punch Taverns (PUB) may be of more interest.

Individual shares are not for everyone, you can lose money as well as gain.

Or for the more opportunistic investor who is willing to take the higher risk and believes that Sterling could continue to strengthen in the coming months you can track the currency markets through FX on BARX from Barclays Stockbrokers.

* Source: National Statistics

Last week saw the FTSE 100 Index (the ‘FTSE’) complete two consecutive months in positive territory for the first time in more than a year and the key consideration for most investors is whether we have finally turned the corner or are we simply witnessing a bear-market rally?
Of course there are no reliable crystal balls out there, but maybe there are some lessons to be learned from simply looking at the calendar, specifically at the price action of the FTSE during two months in the first half of the year, January and May.

‘The January Effect’
Originally observed in the 1980s by Dom Keim, a graduate student at the University of Chicago, ‘The January Effect’ is widely described as the theory that the price action of the market in January will generally govern activity for the remaining 11 months of the year. Applying this interpretation of his theory to the UK market, the FTSE, in 2009, would suggest that we should expect to see the current recovery petering out as the year progresses. The FTSE closed in January at 4,149, down 6.4% on the month – but the recovery since making a low of 3,460.7 on March 9th has been extremely powerful, ending April at 4,243.7 – a rally of more than 22% in just 8 weeks.

This strong recovery presents an interesting scenario as we now move in to the critical month of May.

“Sell in May and go away, stay away till St Leger Day”
All eyes now turn to May which is historically a very poor month for equities.

This time last year, if you had decided to sell in May, you would likely never have looked back. Getting out of the FTSE (or, indeed, going short) at the beginning of May, at 6087 or thereabouts, would have been a very astute trade. As for getting back in to the market (or covering your short position), well maybe St Leger Day might have been a little early – although the FTSE opened on September 15th 2008 (the next trading day after the running of the St Leger) at 5416, 11% lower, there was plenty more to come on the downside through the remainder of the year and indeed into 2009.

There are some obvious clouds on the horizon when you consider May’s traditional poor performance and the likelihood of profit-taking by those who have benefited from the recovery of the last two months.

However looking at the other side of the coin, these are unprecedented times in the markets and if the FTSE manages to put in a positive performance again in May, then the bulls will certainly be in the ascendancy - maybe the green shoots that we hear so much about will have become established roots for a sustained recovery. Three consecutive months of positive performance would be an extremely bullish signal that the markets were starting to shrug off the bad news and a long-term base could certainly be in place.

So, we could be in a crucial part of the year’s market cycle and it will be as important as ever to keep monitoring the markets. As it says in the headline, like good comedy… it’s all in the timing.

Keep track of the market’s performance throughout May using our Research Centre. From here you can follow the major market indices, read the latest financial news and track individual market sectors.

Looking for investment exposure to the FTSE 100? You could consider the iShares FTSE 100 which tracks the performance of the FTSE 100 Index. Or look at our range of Investment Notes, designed to provide a return linked to the FTSE 100 after a fixed period of time together with repayment of capital in some cases.. The value of both these investments can fall as well as rise.

Mainstream news has been fully focussed this week on the outbreak of swine flu and it is interesting to consider just how much of an economic impact such an event may have and whether it could be good or bad for your portfolio’s health!

Global equity markets have wobbled as uncertainty about the spread of the virus caused increasing concern and the macro-economic ripples that the current crisis in Mexico is creating grew stronger. Should a pandemic develop it could have significant influence on economic factors such as the supply of commodities through to the effectiveness of a national workforce.

So what sectors of the economy would be hardest hit by swine flu? The obvious casualty would be tourism. As guidance issued to avoid those areas currently affected starts to restrict travel, holidaymakers may be more inclined to stay at home. If a prolonged pandemic did develop, watch out for reduced trade for airlines, tour operators and hotels – companies all within the Travel and Leisure sector.

On the flip side, pharmaceutical companies could well be economic beneficiaries of swine flu. Already a sector buoyed by resistance to the current recession, it’s fairly certain that pharma companies would see sales of flu remedies and related products soar if a pandemic erupted. Other retailers might see a halo effect here as sales of anything flu related, from handkerchiefs to alcoholic hand washes, see a boost. People are even starting to seriously consider face masks as an acceptable fashion accessory.

Read our Investment ViewPoint from 04 March where we looked at the importance of diversification in portfolios and profiled a selection of stocks in the Pharmaceutical sector.
So it makes investment sense to monitor the markets, observe how different industries react and consider which sector may end up in rude health or a value trough.

Keep track of the economic impact of swine flu through our Research Centre. From here you can follow the major market indices, read the latest financial news and track individual market sectors.

Budget 2009 – Market reaction and commentary

One week after the budget was announced by the Chancellor Alistair Darling, Investment Viewpoint reviews what have been the key headlines across the markets and investment community alike and assesses how the budget is being digested.

Last week after the Chancellors budget speech the market response was fairly muted with only a 43 points increase on the day. Since the market opened the day after the budget was delivered, the FTSE has stabilised at slightly higher levels, suggesting a renewed mood of widespread optimism amongst investors. Or are we simply seeing another bear market rally? Maybe it is too early to make any firm commentary on the impact the budget is having on the market. You can check the latest market reaction by logging into your account and visiting the Research Centre.

Of course the next important date in the calendar was May 4th, when US banks were due to report their stress testing results. However a late change by the Federal Reserve in the US now means these results may not be announced until later next week. The main reason for the delay is thought to be that regulators are concerned about how the disclosure will be handled by the markets. Depending on the output from these performances it is clear this could move markets further and the current air of stability and optimism could be challenged. These tests are being applied to some of the world’s biggest banks, including Bank of America and Citibank, and the results will be eagerly awaited by investors.

So these are the main banks that are still to report but what other sectors have been affected by the budget. There are clearly a number of sectors that stand to be affected in some way as a result of the budget changes. For example the 2p per litre increase on fuel was perhaps to be expected but how has it affected some of the big fuel companies considering the wider weakening demand for fuel is also now becoming a strong indicator for the performance of these companies. On Tuesday BP reported a 62% drop in profits for the first quarter compared to last year and on 29th April Royal Dutch Shell also reported a 58% decrease in profits on the same period a year ago.

You can see how these companies and the sector in general are managing this changing environment including the latest analyst ratings by logging into your account and visiting the Research Centre.

There was also an announced 2% increase on tax on alcohol. With consumers continuing to cut back on luxury items, will this tax increase have a negative effect on alcohol producers? General market commentary suggests it will with more consumers either cutting back on going out to pubs and restaurants or choosing more affordable substitutes and buying alcohol in supermarkets and staying at home.

Finally last weeks Investment ViewPoint (see below) highlighted a number of funding initiatives announced by the Chancellor including £500m to breathe new life into housing projects and £80m for shared equity mortgage schemes. As a result some of the housing companies and mortgage providers have been the most actively traded. For example, during the budget week of Saturday 18th April and Friday 24th April did you know that Barclays, RBS, Lloyds Banking Group and Taylor Wimpey occupied the top 4 positions in our top ten online trades at Barclays Stockbrokers?

You can keep track of this league table by viewing the top 10 trades from Barclays clients.