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Contents Click on the links below to get to the stuff you really really want. USA – Talk of a new support package pushes dollar down; Virus cases rise sharply; Tech stocks down, oil up (#USA) UK – Pound up limiting FTSE 100 gains; Oil prices lift energy companies; Demand for low-risk bonds rises (#UK) Continental Europe – European economic recovery package agreed; DAX jumps 1.0% (#Europe) Elsewhere – Record virus cases in Australia; Japanese and Australian stocks down (#Elsewhere) WTF – Chairwoman (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
There be talk of more financial stimulus packages about the place. The lawmakers (which I misread this morning as “lawnmowers”) in the US (much difference?) are looking at a package to support individuals from the end of July when the $600 per week benefits will stop being paid.
The potential for more financial stimulus pushed the value of the dollar down (more cash being pushed into the system means that every dollar already in circulation will have less buying power as more is added).
While this debate not so much “raged” as “dribbled” in the background, more virus cases were being recorded in the fore. Almost 60,000 new cases and 531 deaths were recorded in the US alone on Monday. Of the 14.7 million cases, the US accounts for more than 3.8 million. Trump has successfully put America first on that competition.
More virus vaccine trial results are providing a growing (stretched?) hope that an effect virus treatment will be found, tested, approved, distributed and administered fairly soon. That helped to give the positive shareholders the edge, nudging the S&P 500 up by a modest 0.2% on the day.
The tech-heavy Nasdaq Composite dropped by 0.8% though. Tech stocks have fared well during the internet-reliant lockdown, so a lifting of that would steal some of their thunder. Tesla’s thunder was well and truly silenced yesterday after the company’s shares got a broker downgrade, sending them 4.5% lower on the day. Meanwhile, shares in IBM and Philip Morris (cigarette manufacturer) were up after both companies posted better-than-expected results for the second quarter of 2020.
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UK
With the dollar falling in value relative to other currencies, the pound rose to $1.272. It had dipped to $1.233 in June and sank to $1.557 in March. While this relative rise in the pound might suggest a relative strengthening of the UK economy, it reduces the profit margins of UK companies that focus on exports. The FTSE 100 is dominated by such companies so it only managed a 0.1% rise yesterday compared to the more domestically focused FTSE 250 which managed a 0.7% gain.
The big driver of gains was the rise in oil prices that took place yesterday; they’ve since sunk as US stockpiles are reported as being higher than had been expected. But oil prices were up yesterday and that sent the oil & gas sectors of the FTSE 100 and FTSE 250 up by 3.4% and 5.2% respectively.
Notable individual company moves included Hargreaves Lansdown and Trainline, both of which jumped by more than 10% on the day. Hargreaves was relieved that a US competitor was delaying its move into the UK market, while Trainline pleased investors by appointing a chief operating officer.
Turning to the succulent world of bonds, I can report that the demand for and prices of lower-risk rated bonds continue to rise. Folk are still proper nervous. And, as we know and love, when the price of a bond rises, its yield falls. Hence the yields on benchmark 10-year Gilts (UK government bonds) have dropped to below their March lows. They now pay a measly 0.14%, way off the 0.8% they were paying in December.
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Continental Europe
Klaus, Sven, Zoltan and Philippe have fudged their way to a European economic recovery package. This is unprecedented in that it is a European Union financial package as opposed to something from the European Central Bank. €750 billion will be made available to help companies recover from the effects of the lockdown. The money will be provided by €390 billion of grants and €360 billion of loans.
It’ll take months for that to clamber its way through the EU system, but the fact that it was agreed gave investors cause to celebrate yesterday. The geographically broad Euro Stoxx 50 added 0.5% while the German DAX with its big exporters which have had a really tough time of late, closed a full 1.0% higher.
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Elsewhere
Australia recorded its worst day of virus cases which drove sentiment and stock prices down earlier today. The S&P 500 sank by 1.3%. Japanese and Hong Kong stocks also declined as investors questioned the ability of US lawnmowers to implement a fresh rescue package before the current one expires and Americans are left much less able to buy stuff from Japan or anywhere else.
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WTF (What’s The Fact?)
Chairwoman
Canadian woman, Marcella Zoia, pleaded guilty to throwing a chair from a balcony onto a busy road. She was spared jail.
A photo of her will tell you that she is cut from Kardashian-style cloth, replete with inflated lips, false eyelashes and wearing a lifetime’s supply of foundation.
She was spared jail because in her defence she’d said, “I was under peer pressure to do it. But it didn’t work because by the time I’d got the chair moving it was too late to sit in it.”
The judge felt it would have been unreasonable to send Zoia to jail because the inmates there have it bad enough already.
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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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