The UK economy is set to boom. Here are 3 FTSE 100 shares I’d buy

Activity data makes a case for an economic boom. Stock markets in general should benefit, but Manika Premsingh is interested in these FTSE 100 stocks.

Manika Premsingh ❯

@macro_think

Manika Premsingh is an economist, financial writer and investor, with a focus on converting macro trends into actionable investment ideas. She has worked in the UK and India with clients across financial services, consulting firms, public sector and non-profits. She has shared her views at multiple international forums and has been widely quoted for them in leading media. Manika is a Masters in Economics and was also a recipient of the Goldman Sachs 10,000 Women scholarship for Certification in Entrepreneurship for her research startup, Orbis Economics. She is on twitter @macro_think

Published 23 April, 2021 12:46 pm BST

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The good news keeps rolling in for the UK economy at the moment, and by association, for my investments in FTSE 100 shares.

Take a look at these developments from earlier today.

Signs of the boom

The Purchasing Managers Index (PMI), a well-known survey indicator that can predict growth, rose to its highest level in over seven years in April.

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The UK government’s retail sales’ numbers rose by 5.4% in March compared to the month before, beating economists’ expectations. Easter sales and partial easing of the lockdown encouraged consumers to buy more. This also bodes well for April, as more easing has happened.

Another sentiment indicator, the GfK Consumer Confidence Index also rose to a 13 month high in April. The index is a gauge of how consumers view their personal finances and the overall economy.

A boom has been forecast already. Based on these three data points, I infer that the case for it just became stronger. UK’s households have racked up record savings, government support to key sectors like real estate continues, and the governments of big economies like the US and China are pumping huge amounts of money into the economic system.

What it means for my FTSE 100 investments

In my experience, at times like these it is easy to feel invincible as an investor. Whichever FTSE 100 stock I buy, it has a higher chance of rising than not. This may not be true of some of the smaller stocks, but it is broadly so for large multinationals of the kind that are found in the headline index.

I would like to make the most of my investments now, rather than invest indiscriminately. So I am going to buy FTSE 100 stocks that have missed out on the rally so far or are still struggling from the stock market crash last year.

AstraZeneca can rise further

One of them is the Anglo-Swedish pharmaceutical biggie AstraZeneca, which has seen some really rough times in the recent months. As a ‘safe’ stock, it rallied in the stock market crash of 2020. The early development of an effective vaccine along with the likes of Pfizer-BioNtech and Moderna, made it stand out even more.

But despite the stock market rally in late 2020, questions over the vaccine’s side-effects and its inefficient distribution to the EU have been damaging to the AstraZeneca share price. It has started recovering, though. In April alone, its share price is up almost 7%, even if over the past year it is down by almost 6%.

Oil costs to drive these FTSE 100 shares’ prices

Oil giants BP and Royal Dutch Shell are two others I am watching actively now. A roaring comeback in the economy will not happen without elevated crude oil prices. And that is where oil companies come in.

Over the long term, they will have to pivot to clean energy sources to stay relevant. But for the foreseeable future, I think they should do well. Right now, both their share prices are way below the pre-market crash levels. I already own shares in both the FTSE 100 stocks, but now I am thinking of topping up.