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Contents Click on the links below to get to the stuff you really really want. USA – Stocks up on lower trading volumes despite negative economic data; Oil, travel and leisure companies rose (#USA) UK – Easing lockdown restriction hopes and vaccine news lifted pound and domestically focused stocks (#UK) Continental Europe – Stock indices stayed put; Oil up, healthcare and utilities down (#Europe) Elsewhere – Official recognition of Joe Biden as president-elect lifted sentiment and stock prices (#Elsewhere) WTF – Damn it, Janet! (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Trading volumes in the US are lower this week as folk gather to celebrate a game of near-rugby ruined by endless commercials and other interruptions while attempting to digest the calorific equivalent of an entire gazelle.
The macro-economic data were negative. The IHS Markit composite purchasing managers’ index or IHSMCPMI if you prefer, or near-term overall outlook if you must, moved down from a neutral measurement of 50 to a decidedly negative reading of 45.1. But that’s not garnering too much attention, apart from everyone girding their seats for a mass intake of protein and starch, December looks set to be relatively positive what with all the vaccine talk that’s going on.
Oil prices were up on hopes of more industrial activity thanks to the potential for eased lockdown restrictions in the new year. At the same time, travel and leisure companies had a good day on further news of vaccine trial progress.
The general effect was to leave traditional stocks up with tech stocks and sandwich deliverers down. The S&P 500 closed 0.6% higher.
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UK
The latest vaccine news combined with indications that lockdown restrictions could ease in a couple of weeks’ time to lift investor optimism in the UK.
The value of the pound also rose relative to other currencies, reflecting an improved outlook for the UK economy. That has a detrimental effect on companies listed on the FTSE 100 which, overall, generate around two-thirds of their revenue from overseas sales: higher pound, higher export prices, lower profits, lower stock prices. It’s all very short-term, but then, this is the DAILY market update, so what can I tell you?
The FTSE 100 closed 0.3% lower, pulled down by the usual export-focused suspects such as British American Tobacco and drinks giant, Diageo (two companies that make people ill) and AstraZeneca and GlaxoSmithKline, two companies that purportedly get people well again. Talk about recycling. Oil prices were lifted by hopes of increased economic and industrial activity, and that raised the stock prices of BP, Shell et al (their costs don’t change much, so when the price goes up, so do their profits).
The FTSE 250 is less affected by variations in the value of the pound, so the generally positive outlook held sway on the mid-cap index, leaving it 0.4% higher on the day. This came despite the latest round of macro-economic data putting a dampener on things. Private sector activity fell more than had been predicted according to the IHS Market/CIPS survey. What that boils down to is, “Er, pretty bad last month, eh?” “Yeah. Thought it might be.” So not something to wake the spouse for.
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Continental Europe
Stocks across the Continent were doing their, “hey everyone, let’s all freeze on this video call so that the next person who joins thinks the link has broken”. Or, to put it another way, almost every major continental stock index closed very close to the price at which it had started the day.
Oil stocks jumped, much as they did in the UK, while healthcare and utilities slid slowly downwards, much like the pigeon that flew into my window the other day. The imprint of the pigeon is still there in respect of the downed warrior. I’ve never much liked pigeons unless they’re roasted in red wine sauce, so this one didn’t endear itself to me by causing a near myocardial infarction (in me, not the pigeon, though I’m not discounting the possibility).
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Elsewhere
The official recognition of Joe Biden as president-elect, while criminally slow in coming, inspired a sense of stability across Asia-Pacific stock markets. The Japanese Nikkei 400 caught up on recent rises following a public holiday there to close 2.2% higher this morning. The Australian S&P/ASX 200 added 1.3% and there were further gains in India, South Korea and Hong Kong.
The exception was mainland China where the CSI 300 is down by 0.6% at the time of writing thanks to the Trump administration lining up more restrictive measures for China.
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WTF (What’s The Fact?)
Damn it, Janet!
In a move that demonstrates the contrasting nature of Biden and Trump’s philosophies, Biden appears to have Janet Yellen in mind as the next Treasury Secretary. She was a steady hand at the Federal Reserve and joined her predecessor, Ben Bernanke in supporting the current incumbent, Jerome Powell, is standing his ground against orange dictator, Trump.
This ought to be welcomed by investors who will want a steady, predictable hand on the financial tiller as the world slowly recovers from the pandemic. Investors might have had reason to worry that Biden would tax and spend loads, upsetting corporate revenues. But without control of the Senate (unless the Democrats surprise by winning both Georgia Senate seats in January’s run-offs), there isn’t much room for a Biden administration to do a great deal. One senior chap at a massive investment banking house described the situation as “perfect for markets”. We’ll see.
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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’re unable to recognise the devil’s ear wax when you see it, then you’re on your own.
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