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Contents Click on the links below to get to the stuff you really really want. USA – Tech stocks up despite Facebook lawsuit; Financials down; Import costs up (#USA) UK – Low pound pushes FTSE 100 up; Miners and oil companies benefit from Chinese data; Financials down; Bond yields reflecting sustained concerns (#UK) Continental Europe – Stocks nudge up; Bayer settles a bunch more legal cases (#Europe) Elsewhere – Chinese stocks down; Australian stocks up (#Elsewhere) WTF – Dental hygienists (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Technology stocks were heading up again in the US yesterday after recovering from news that Facebook might be facing an antitrust lawsuit (i.e. behaviour where a company does stuff to snuff out competitors), and following a virtual-only product launch from Apple. The tech-heavy Nasdaq ended a solid 1.2% higher on the day.
The broader S&P 500 managed a 0.5% gain as financial stocks fell in late trading. The Federal Reserve (equivalent of the Bank of England) is having one of its regular powwows, and the general expectation is that it will continue to provide stimulus to support the economic recovery. But that keeps interest rates and bond yields low, which throttles profits on lending business for banks.
Them there bond yields remained fairly steady, with that of the benchmark 10-year Treasury (US government bond) trundling along at around 0.67%.
One other point of note for me was that import prices have nudged up. This might be a taste of things to come as the blonde president goes around making enemies of as many trading partners as possible and endeavouring to bring manufacturing back to the US, where it costs more.
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UK
The value of the pound continues to remain low thanks to concerns over Brexit. That provided its usual boost to the FTSE 100 which closed the day 1.3% higher. Rising oil prices also contributed to this gain as Shell and BP account for a massive 15% of the entire FTSE 100 index.
Metal prices were also recovering following the positive news coming out of China yesterday (suggesting a faster-than-expected rate of economic recovery). China is by far the world’s biggest consumer of metals, concrete and the like, so if its prospects look good, then mining companies can have a party.
Ocado was the stock of note yesterday. It jumped by 10.7% after releasing data showing that its sales were up sharply. Marks and Spencer also got some benefit from this now that the retail stalwart has a deal in place with Ocado.
As usual, the more domestically focused FTSE 250 didn’t benefit as much from the lower pound or rising commodities prices. So it closed the day 0.8% to the good.
Bonds are worthy of a mention. Yields on the 10-year Gilt (UK government bond) have shown a couple of interesting (well, mildly not-so-dull) moves in recent weeks. The demand for and prices of bonds was rising steadily throughout July sending yields steadily down to just 0.1%. They had been trading above 0.7% at the end of 2019. Then a large issuance of government bonds distorted the numbers. Since then, bond investors have been vying with more financial stimulus and Brexit concerns. The upshot is that 10-year Gilt yields are currently trading around 0.2% after having spiked up to almost 0.35%. The point being that folk remain very concerned over the Brexit-Covid combo, hence demand for low-risk investments such as bonds remains high even though their yields are so low.
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Continental Europe
With no currency boosts to speak of and smaller mining operations, major continental stock indices were only able to post relatively minor gains on the day. The Euro Stoxx 50 and German DAX added 0.5% and 0.2% respectively.
Bayer was the mover of note. It bought the chalice that turned out to be poisoned in the form of Monsanto a few years back. Monsanto produced Roundup weedkiller. Turns out it also kills people, so Bayer has been struggling with a slew of court cases ever since. They settled a bunch more yesterday which helped to restore 2.7% of value back to the company’s share price.
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Elsewhere
Yesterday morning’s pattern of rises and falls is, more or less, in reverse this morning. The boost provided by positive Chinese economic data appears to have run its course for much of China and southeast Asia. The indices for mainland China, Hong Kong and South Korea are all lower at the time of writing.
Australia’s S&P/ASX 200, by stark contrast, is up a full 1.0%. It’s reacting positively to the Chinese data that could provide a boost to its large mining industry.
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WTF (What’s The Fact?)
Dental hygienists
Dental hygienists constitute an interesting breed. Their ability to inflict pain and discomfort is remarkable. No sooner have they finished scraping and jarring your teeth than they blast chilled air at your exposed roots, tell you rinse before taking their foot off your face, smiling sweetly and chirping, “Do you pay for your treatment?”.
Yes. In every sense.
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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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