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Contents Click on the links below to get to the stuff you really really want. USA – China spat vies with stimulus package to direct sentiment; Oil and bond yields down, tech up (#USA) UK – Lack of tech giants left stocks down, led by oil; Bond yields down (#UK) Continental Europe – As UK (#Europe) Elsewhere – Chinese stocks down (#Elsewhere) WTF – Not in Notting Hill (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Stock prices in the US inched towards more record highs as investors focused on hopes rather than facts. The hopes are that the Democrats will follow through with their intention to compromise more to push another stimulus package through, and then add more stuff to their agenda after November’s election (which they seem slight favourites to win at the moment). At the same time, virus case numbers appear to be easing across the likes of Texas and Florida.
The facts included Trump called off the weekend’s talks with China and China complaining about the US trade restrictions on Chinese tech companies. Throw in the surging stockpiles of oil in the US pushing oil prices and related companies down, and you have stock prices that are looking vulnerable to any bad news.
Oil-related stocks dropped the most, while consumer services companies led gains. Amazon, Alphabet (Google), Adobe and Microchip Technologies were in the vanguard of rising names. The S&P 500 nudged up by 0.2% on the day while the tech-heavy Nasdaq Composite added 0.7%.
Bond investors are, once again, being rather more staid. The demand for and prices of benchmark 10-year Treasuries (US government bonds) rose, sending the yield down from its August peak which followed the issuance of loads of new government bonds. In other words, bond investors are still very cautious about what could happen next.
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UK
Stocks across Europe aren’t dominated by the FAANG stocks as they are known (Facebook, Amazon, Apple, Netflix, Google and the like). And it is those stocks that have dragged US stock indices up.
Instead, UK stocks were pulled down by the general negatives prevailing in the economy and political landscape. Oil stocks and utilities led declines.
House-builders had a decent day though. Persimmon resumed paying a dividend to shareholders after house sales surged following the release of pent-up demand from the lockdown.
Capita was at the other end of the list, slumping by 20.0% on the day after the outsourcing group reported a slump in sales.
This lot left both the FTSE 100 and FTSE 250 0.8% down on the day.
Gilts (UK government bonds) are following a similar pattern to their US counterparts. The demand for and prices of them have risen again in recent days as investors return to finding perceived havens in which to park money.
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Continental Europe
Much like the UK. Oil stocks and utilities led declines, but banks and travel companies also had a tough time. The Euro Stoxx 50 and German DAX closed 0.5% and 0.3% lower respectively yesterday.
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Elsewhere
Folk in Hong Kong have been hit by an actual typhoon (unusually on a weekday giving them a day off work) shortly after Beijing’s thugs swept in to arrest the pro-democracy media mogul, Jimmy Lai, among others.
Investors across the region aren’t much moved about that, it was always going to happen. The real concern is two-fold: the virus numbers and wait for a vaccine, and the souring relations between the US and China. It’s countries like Taiwan and Vietnam that are most likely to suffer from the ongoing spat because they depend on China/ US for so much of their custom and will end up being trampled by the big boys.
Chinese stocks were without politburo support this morning, hence the CSI 300 closed 1.5% lower. The rest of the region’s performance today is fairly unremarkable.
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WTF (What’s The Fact?)
Not in Notting Hill
The Notting Hill carnival has announced a digital line up as the pandemic has prevented the live event taking place. A number of online performances and acts will be broadcast and hosted by a couple of radio DJs with virtual intelligence.
Meanwhile, to create a sense of authenticity, the police will be guarding cutlery sets at home in a bid to reduce virtual knife crime. Chief Constable Dimbleby proudly announced that his force would be virtually useless. Locals agreed.
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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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