The US has threatened sanctions on Chinese officials in response to China’s oppression of Hong Kong citizens. Who knows how or when this will end.
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Contents Click on the links below to get to the stuff you really really want. USA – Exuberance was curtailed by more US-China tensions; Stock rises limited; Traditional industries rose the most (#USA) UK – Stocks and pound up on optimism; Travel companies rocketed; Investors moved out of low-risk stuff such as Gilts (#UK) Continental Europe – Second day of gains; Spain led rises following end of quarantine programme (#Europe) Elsewhere – Most stocks down on US-China strains; Japan up on new stimulus (#Elsewhere) WTF – Spanish flew (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Folk were merrily pouring money back into stocks yesterday as they decided that the virus was a mere trifling thing that has been defeated and will never rear its ugly crown again.
Then, in late trading, boring old reality struck again in the form of yet more pressure on the relationship between the US and China: the Trump administration let it be known that it was considering sanctions on Chinese officials in response to Beijing’s oppression of Hong Kong citizens.
That knocked the gloss of the day’s trading, but the S&P 500 still managed to post a 1.2% gain. Traditional manufacturing, industrial and retail stocks benefited the most, leaving tech stocks behind for once (the tech-heavy Nasdaq Composite only managed a 0.2% rise).
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UK
The positive mood (before the US sanctions announcement came) was contagious, sending the FTSE 100 and FTSE 250 up by 1.2% and 3.3% respectively. The apparent assumption that things are going to get better really quickly for the UK was reflected in the rising value of the pound relative to the dollar. That limited gains on exporters which dominate the FTSE 100.
All the stuff that had done badly over recent days was leading the gains. Financial, industrial and consumer service stocks rose sharply while healthcare stocks on the FTSE 100, which had been doing better, dropped yesterday. Easyjet and British Airways (aka AIG) posted massive gains of around 20% each. You think that’s good? Tui jumped by 52.0%, yep the purveyor of unspeakably irritating adverts (and holidays) regained a big chunk of lost value.
What of those rather more sanguine bond investors? Well, even they jumped on for the happy-clappy ride. The demand for and prices of benchmark 10-year Gilts (government bonds) dropped sending their yields up to above 0.2%, but still at stratospherically low levels. So, there’s still plenty of doubt in some people’s minds.
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Continental Europe
Having already had a day of gains, stocks across the Continent posted smaller gains than those of their Anglo-Saxon brethren. The Euro Stoxx 50 and German DAX both closed around 1.0% higher on the day. It was a diluted version of what I’ve described above for the UK and US.
Spain had a bit more to shout about as it has lifted its quarantine programme. This is not too surprising as tourism accounts for a shed-load of invisible exports (money coming in from abroad that isn’t made up of physical goods sent overseas). This pushed the benchmark Spanish Ibex stock index up by 2.1% on the day.
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Elsewhere
It’s been a more sober start to trading across the Asia Pacific region this morning with the growing tensions between the US and China taking their toll.
Benchmark indices in China, Australia, Hong Kong and Taiwan all posting losses. The most pronounced were those of the tech-heavy Taiwan 50.
Indian stocks were less affected by the geopolitical backdrop, and managed to post fairly solid gains, while Japanese stocks rose on news of further financial stimulus being provided by the government there.
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WTF (What’s The Fact?)
Spanish flew
Yes the Spaniards are conveying a grande bienvenida to us UK folk who spend billions each year on visiting Spain. We take a break from the egg and chips and cheap beer to feast on huevo y papas fritas and cerveza barata. El yumio.
But it’s not all plain sailing for intrepid Brits abroad. Here are some of the complaints collected by ABTA from some prime examples of our unofficial ambassadors:
“The beach was too sandy.”
“We found the sand was not like the sand in the brochure. Your brochure shows the sand as yellow but it was white.”
“It took us two hours to fly home from Spain to England. It only took one hour to get home from France.”
“The brochure stated: ‘No hairdressers at the accommodation’. We’re trainee hairdressers – will we be OK staying there?”
“There are too many Spanish people. The receptionist speaks Spanish. The food is Spanish.” Makes you proud.
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Links
Investopedia (www.investopedia.com/dictionary/) – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point Guffipedia (ig.ft.com/sites/guffipedia/) – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies Guardian (www.theguardian.com) – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott) Times of India (timesofindia.indiatimes.com) – Why use five words when 37 will do? Daily Mail (www.theatlantic.com/magazine/archive/2016/07/the-war-on-stupid-people/485618) – Click it. I dare you.
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———————————————————— IMPORTANT This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you are too stupid to recognise the devil’s ear wax when you see it, then you’re on your own.
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