News & Views

How negative can we go?

16/10/2019 - Feature Articles
In September, Reuters reported that Denmark’s Jyske Bank was reducing interest rates for savers in response to a rate cut by the Danish central bank. This isn’t much of a story but for the rates themselves: savers with over DKK750,000 (about £88,000) receive the central bank’s rate of -.75%. Yes, that’s a negative number. The bank will charge savers at least DKK5625 (~£661) annually to ‘store’ their money!
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Weekly Market Review

11/10/2019 - Product News
Brexit and US/China talks dominate thoughts During a week light on new economic data releases, investors’ attention has been drawn towards apparent progress in Brexit negotiations, and hopes that the latest trade talks between the US and China may lead to at least a truce, encouraged by the partial trade deal signed by Japan and the US last week.
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Highlights and Lowlights: what caught our eye in September 2019

10/10/2019 - Product News
Major political and trade issues continued to dominate news, with a trend toward escalation rather than resolution. UK politicians found ever more extreme ways in which to disagree with each other, with the UK Supreme Court dragged into the mire after Boris Johnson tried to resolve the impasse by removing Parliament from the process entirely. Across the pond, Democrats moved towards impeachment proceedings over Trump’s ill-advised call with Ukranian President Volodymyr Zelensky.
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Weekly Market Review

04/10/2019 - Product News
Leading economic indicators continue to deteriorate whilst trade war marches on. Equity markets fell this week as lead indicators for the health of the manufacturing and service sectors of the global economy continued to deteriorate. The US Institute for Supply Management’s manufacturing index fell to 47.8 in September, sharply lower than forecast, with 50 representing the dividing line between expansion and contraction. Manufacturing only accounts for 11% of the US economy and is dwarfed by the service sector, however, investors are increasingly looking for signs whether the weakness is spilling over into the wider economy. A slowing trend in the number of new private sector jobs created did little to calm nerves, with 135,000 new jobs added in September, the weakest in three months and beneath expectations.
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Weekly Market Review

27/09/2019 - Product News
Weak European data drowned out by impeachment proceedings brought against President Trump News at the start of the week that the German manufacturing sector had continued to slip into recession was soon drowned out by US headlines, as Nancy Pelosi, the Democratic speaker of the House of Representatives, announced impeachment proceedings against President Trump.  This followed revelations that the US president had pressed his Ukrainian counterpart, Volodymyr Zelensky, to investigate the local business activities of a Democratic presidential candidate, Joe Biden, and his son, with the suggested intention of gaining political advantage.  However, this was balanced by recent trade talks held between the US and China that were described as “productive”, with Trump quoted as saying that a trade deal with China “could happen sooner than you think”.
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Weekly Market Review

20/09/2019 - Product News
Markets seesaw between heightened geopolitical risks and central bank easing Following widespread falls in equity markets at the beginning of the week, triggered by a drone attack on Saudi Arabia’s oil infrastructure over the weekend, markets gradually recovered as several central banks either cut rates or pointed towards future easing if global economic weakness persisted. The oil price, which spiked by a massive 19.5% in intraday trading on Monday, gave up much of its gains as the Saudis reassured markets as to their ability to fully restore the oil supply by month end. As of 12pm London time on Friday, the US equity market over the week was broadly unchanged at a headline level. European markets were up 0.4%, whilst the UK’s stock market was down 0.1%, not helped by a rally in Sterling back above $1.25 and €1.13 on comments from the European Commission President, Jean-Claude Junker, that a Brexit deal was possible. As Sterling appreciates, overseas earnings decline when translated back to the UK. Japanese equities climbed 0.4%, Australian equities rose 0.9%, whilst Emerging Markets fell 1.0%.
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Weekly Market Review

13/09/2019 - Product News
Stocks globally moved higher for a third week in a row helped by easing trade fears, and additional central bank stimulus in the Eurozone. Similarly, global trade tensions thawed this week ahead of the US-China trade talks next month. Earlier on Wednesday Beijing decided to exempt 16 types of US products from Chinese tariffs, and in return the US administration made a “goodwill” gesture, announcing that the original date for the increase of tariffs on $250bn worth of Chinese goods would be pushed back two weeks to coincide with the 70th anniversary of the founding of the People’s Republic of China.
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The dangers of confirmation bias

12/09/2019 - Feature Articles
August was a torrid month for investors in Argentine assets. After a poorer than expected performance by market-friendly Mauricio Macri in the first round of the Presidential election, fears of a return to populism caused the main index to plunge 37%. The currency also fell 20% against the US dollar, making the slump the largest one-day fall in any market since 1950. In addition, the yield on Argentine government bonds spiked to distressed levels, with the likelihood of a debt default in the next five years spiralling to 75%.
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Highlights and Lowlights - August 2019

11/09/2019 - Feature Articles
August was a month that saw tensions surrounding long-running issues rise to new levels. Whilst none of Donald Trump’s trade war with China, Brexit or Italy’s political travails resolved themselves in any meaningful way, they did show signs of coming to a crescendo. However, with there having been several occasions recently when the promise of a solution has proven a false dawn, it would be a brave person that would act on the possibility of any of them finding one. In response to such escalations, equity markets fell across the globe. By contrast, Fixed Interest performed well, as the yield on 30-year US Treasuries fell below 2% for the first time and the amount of negative-yielding debt headed towards $20 trillion, whilst safe-haven assets such as gold and the Japanese yen rose.
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Weekly Market Review

06/09/2019 - Product News
Sentiment turns positive despite widespread evidence of contraction in manufacturing sector Market sentiment turned positive this week, despite data released at the start of the week which pointed towards wide spread contraction within the manufacturing sector, as a series of positive announcements turned investors perceptions. The withdrawal of the contentious extradition bill in Hong Kong, hard Brexit risks seemingly receding, supportive service sector PMI (purchasing managers index) data and the resumption of trade talks between the US and China all helped to improve sentiment. All eyes are now on the release of the US non-farm payrolls employment data due out this afternoon to gauge the impact of the trade war on the US economy and provide further clues as to the next move by the US Federal Reserve.
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