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Contents Click on the links below to get to the stuff you really really want. USA – No clear direction on Friday; Oil and finance companies up, tech and utilities down; Bond yields nudged down (#USA) UK – Negative news abounded to drag stocks down; Travel and leisure led declines (#UK) Continental Europe – Rise in German virus cases added to woes (#Europe) Elsewhere – Chinese stimulus lifted southeast Asian stocks (#Elsewhere) WTF – Where are we at? (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Stocks in the US had no real direction on Friday as data came in to show that the economic recovery had slowed, while there was still no progress with the talks to come up with a stimulus package.
Oil, telecoms and financial companies had a reasonable day while technology and utilities headed downwards. All in all, a bit of a dull day with the S&P 500 ending the day at much the same price it had started with.
The demand for and price of lower-risk rated bonds nudged upwards as investors moved on from the latest batch of government bonds that had been sold (and which helped to push prices down and yields up). The market still needs to settle down a bit before the trend in bond yields becomes a bit clearer.
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UK
UK investors were dealing with underwhelming news from the US, a drop in retail sales in China and more virus cases being recorded in France. The UK government added various countries to the quarantine list, pulling travel and leisure share prices down.
Easyjet, IAG (British Airways), Tui, Rolls Royce and the like all got battered, sending the FTSE 100 and FTSE 250 1.5% and 1.1% lower respectively. Tui, the world’s biggest tour operator, cancelled all tours to Spain after the German government advised against non-essential travel to the country, Bloomberg reported.
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Continental Europe
Germany itself didn’t have a great time. The country registered the highest number of virus cases for a single day since the end of April. This combined with the international news to pull the majority of stocks down with technology and travel-related companies all suffering.
The Euro Stoxx 50 and German DAX dropped by 1.1% and 0.7% respectively on Friday.
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Elsewhere
Retail sales in China dropped by 1.1% in July compared to one year earlier. This was far below the expected 0.1% rise. Once again, those cuddly folk in the Beijing politburo have galloped to the rescue with the country’s central bank injecting a load of cash into the system.
As well as the immediate effect, that also raised hopes that there’d be more to follow. So stocks in southeast Asia are up with the Chinese CSI 300 a full 2.4% higher at the time of writing.
Things are less tickety-boo in Japan and Australia. The respective countries’ benchmark stock indices closed lower this morning as folk pondered on the outlook for US-China relations among other things.
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WTF (What’s The Fact?)
Where are we at?
These are the factors that are pulling stocks and bonds around at the moment: * US-China tensions: lower tensions, higher economic growth, higher profits, higher stock prices * US stimulus package: lack of package = stasis and vulnerability of economy, delivery of package provides economic stimulus * Virus cases: Rising cases = more lockdown measures = lower economic growth * Proven vaccine: Everyone looks ahead to post-pandemic environment = economic recovery * Central bank activity: Maintaining low interest rates and bond-buying schemes provide “liquidity” i.e. cheap borrowing for households and companies which aids economic growth
Individual stocks are being pushed around by quarterly results, upgrades/ downgrades in outlook, general industrial data (jobs numbers, inflation etc.)
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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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