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Contents Click on the links below to get to the stuff you really really want. USA – Investors more reticent as virus cases rise and stock prices are high; Oil prices down again; Bonds steady (#USA) UK – Gold miners led gains; Financial companies down (#UK) Continental Europe – Negotiations continue over financial recovery package; Carmakers led rises on Friday (#Europe) Elsewhere – Chinese stocks on positive note this morning (#Elsewhere) WTF – Moon Day (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
After around three weeks of exuberance in the stock markets, investors are becoming more reticent with prices so high, corporate reports set to start pouring in and virus cases still not under control.
Los Angeles Mayor, Eric Garcetti, has warned that the city is on the verge of another lockdown order while the number of cases in locations as diverse as Florida and Hong Kong rose sharply.
In short, folk don’t know what to expect next, so stock price moves were fairly subdued. The S&P 500 nudged 0.3% higher on Friday with financial stocks (banks, investment companies etc.) down by 0.2%. And that was the biggest move among the industrial sectors.
One of the sectors that did not do well on Friday was that of oil & gas. The demand for oil has fallen due to the lockdown measures which has offset the fragile balance that existed between demand and supply. There’s loads of oil sloshing around and insufficient people buying it to keep the prices up. Hence they’ve fallen so much over recent weeks. Oil prices fell again on Friday as these concerns persisted, hence the share prices of oil-producing companies and related engineering firms and the like fell.
The demand for and prices of bonds continue to remain fairly steady. Bond investors don’t appear to be on the same hair-trigger that their stock-investing counterparts are. So the yield on the benchmark 10-year Treasury remains at around 0.62%, where it’s been since mid-April give or take a few spikes. Until a proven treatment for the virus comes along, don’t be surprised if those yields stay in that vicinity.
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UK
Stock price movements were fairly limited beyond the US as well. In the UK, the FTSE 100 and FTSE 250 closed 0.6% and 0.2% higher respectively. Miners nudged up led by gold producers as demand for the yellow metal during this time of crisis led folk at CitiBank to declare it only a matter of time before gold prices hit new records.
That sent gold producer, Fresnillo, to the top of the risers on the FTSE 100 with pharmaceutical companies not too far behind. Financial companies were on the way down though as doubts persist over the strength of the recovery and banks’ ability to make money from an ailing economy.
The mid-cap FTSE 250 index doesn’t have the same number of big miners or pharma companies, which is why its rise was more modest on Friday. The big moves were more stock-specific with AO World leading gains after buying back a load of its own shares.
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Continental Europe
The main news on the continent concerns the ongoing negotiations to agree a financial recovery package for the European Union. Talks are set to resume later today in the usual fashion of disagreement, heel dragging, grumpiness and last-minute agreement. The intention is to provide €750 billion but they can’t agree on how much of the fund should be provided through grants or low-interest loans.
Meanwhile, industrial and export companies, particularly car makers, were up while banks and oil companies were mostly down to leave the Euro Stoxx 50 flat and the German DAX 0.3% higher.
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Elsewhere
Stocks across the Asia Pacific region have had a mixed start to the day. If the EU financial package were to be agreed, then investors would have reason to get excited. But, for now, it’s all a bit uncertain not least as corporate reports start to flow in.
Chinese stocks started the week on a positive note with the CSI 300 trading a full 3.0% higher at the time of writing. But how much of that is due to government-led intervention is always difficult to discern. What we can say is that there’s a bunch of initial public offerings (when companies first go to the stock market to sell loads of shares in their respective companies), and that could well spell the end of stock price rises in China while investors digest the new flow of companies stocks.
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WTF (What’s The Fact?)
Moon day
Today is Moon Day. The day when a bunch of teenage schoolboys sit at the back of a coach and provide a unique greeting to following motorists. It’s also something to do with the large white blob that scoots around Earth every month or so. It’s also World Jump Day. Have you seen “Rita, Sue and Bob too”? If you have, the word “jump” takes the teenage back-of-the-bus mentality a stage further shall we say. Busy day for some.
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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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