Market Analysis

06 Aug

“THAT TWITTER ACCOUNT HAS RUN AMOK!”

INDEX

July 2019

5/8/19

% loss

DJIA

27349

25717

-5.96%

S&P 500

3025

2844

-5.98%

NASDAQ

8330

7726

-7.25%

FTSE 100

7686

7240#

-5.80%

DAX

12629

11732#

-7.10%

CAC 40

5618

5290#

-5.84%

SHANGHAI*

3043

2777

-8.74%

HANG SENG*

28875

25976

-10.03%

NIKKEI 225*

21756

20585

-5.38%


*Denotes close of business 6/8/19

# Denotes 12.30pm 6/8/19

 When one considers that the sun is high on the yardarm, the traffic flows in the main global metropolises are almost tolerable, with many families having fled to the well-known international holiday resorts to soak up the rays, whist imbibing and taking on the local victuals to excess, markets have reacted with a greater degree of unexpected violence and volatile hubris, than one might normally expect. Volumes have been light. However, President Trump still metaphorically wears the rosette as the most influential person capable of moving markets significantly, surpassing Greenspan’s and Kaufman’s effortless ability with quite a bit to spare.

The President has ‘got the bit between his teeth’ with China dragging its feet over the outstanding trade deal and the perception that China is also manipulating the Yuan to its advantage to levels not seen for many a year, which President Xi and his team strenuously deny, blaming the  the depreciation of the Yuan on market forces. There is nothing new about these thoughts and actions. Also, it is imperative to remember that the US has not concluded an especially meaningful trade deal since ‘Noah left the Ark.’

With global growth on the decline and with Central banks determined to do all they can to keep business afloat, the chances of rates going up in the foreseeable future are remote. To add to that conundrum, the number of negative government bond yields is likely to increase certainly in Europe, in concert with Japan, where it has almost been a perennial dish of the day. Banks will find it increasingly difficult to increase profits, with low rates and tough regulation. HSBC’S John Flint was shown the door, because development plans were too slow and 6% return on equity is unacceptable. Even Barclays returns just a smidgen under 10%. US banks’ return on equity is nearer 15%. However, what are likely to increase in importance are positive trade deals. Apart from the Trump/China trade spat, we have the Japan/Korea trade difference of opinion, growing discomfort between the US and the EU, not forgetting that the EU is hell-bent on making life difficult for the UK on a no deal BREXIT. Nothing the EU would like more than to see BREXIT fail. Hence investors and Traders have vented their spleens against the market.

 The damage to global markets has been widespread. The initial tariffs imposed by the US and China in the spring are just about starting to take effect. The US may not start feeling the effect of the fresh tariffs of 10% on $300 billion of Chinese goods until around December. Will the importers and exporters take the ‘hit’ or will it be passed on to the consumer? If so, that could be inflationary. We can hope for an early resolve to the unpleasant spat, but there is 15 months to go until the next Presidential election, so President Trump seems in no hurry. Set out below are some random performances, which provide a reasonable barometer of the negative activity that has manifested itself. We have seen a slight rally today, but it may be no more than a ‘dead-cat-bounce.’

Company

July 2019

5th/6th August 2019

% loss

Apple

$204.41

$193.34

-5.41%

JP Morgan

$116.83

$109.57

-6.2%

Amazon

$2020.99

$1765.13

-12.6%

McDonald’s

$215.91

$201.45

-6.70%

Boeing

$377.36

$331.06

-12.27%

IBM

$149.63

$140.76

-5.92%

Caterpillar

$139.64

$121.65

-12.89%

Anglo-American

2240p

1834p

-9.40%

Rio Tinto

4976p

4282p

-13.94%

M&S

213.10p

191.20p

-10.27%

RD Shell

2604p

2329p

-10.56%

RBS

230.70p

198.95p

-13.76%

Centrica

89.12p

70p

-21.45%

Sanofi

€78.24

€73.34

-6.26%

Peugeot

€23.05

€19.94

-13.49%

Deutsche Bank

€7.18

€6.86

-4.45%

VW

€158.62

€144.18

-9.10%

BASF

€63.86

€57.30

-10.27%

Bayer

€61.31

€56.39

-7.70%

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