CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider (Saxo Bank). You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.

September 2018 Newsletter

Themes from September 2018

Federal Reserve raised the Federal Funds rate 0.25% to 2%-2.25% citing a strong economy that no longer needed monetary stimulus.

Italy ignored Brussels’ demands for budgetary restraint and voted to increase spending. The new budget led to a spike in Italian yields to 3.2% as the new Italian leadership promised to wipe out poverty.

Barrick Gold is to acquire Randgold Resources in an all share merger that will combine the boards of the two companies. Post-merger Barrick Group will be listed in NY and Toronto.

Jeremy Corbyn is embracing green energy and wants thousands more windfarms and a solar panel on every viable roof, alongside a tax on second homes.

Goldman Sachs is to launch an easy access savings account via its “Marcus” branch. The new UK savings account offers 1.5% interest to account holders.

Derivatives focused brokers had a poor month. CMC Markets now expects net operating income 20% lower whilst IG’s CEO stepped down after a weak Q1 due to client inactivity and low returns.

Aston Martin IPO will be priced in a range of 1750p-2250p implies a market value of £4bn-£5.07bn.

Jardine Lloyd agreed to be acquired by US insurance broker Marsh & McLennan for 1915p per share in cash.

Forthcoming UK Events

1 October BoE Consumer Credit
2 October Nationwide House Prices/ Construction PMI
3 October New Car Sales / Markit UK Services PMI
4 October UK New Car Sales
5 October Halifax House Price Index
10 October UK Balance of Trade/ Manufacturing Production/ GDP 3 month average
16 October UK Unemployment Rate/ Average Earnings
17 October Core Inflation Rate / PPI core output/ Retail Price Index
18 October UK Retail Sales
22 October Public Sector Net Borrowing
24 October UK Finance Mortgage Approvals

Performance of World Markets (28/9/2018)

North America Value Change +/-(1M)% +/-(1YR)%
DOW JONES (Close) 26,458.31 493.49 1.90 17.29
S&P 500 (Close) 2,913.98 12.46 0.42 15.22
NASDAQ (Close) 8046.35 -63.19 -0.77 23.47
Europe/UK Value Change +/-(1M)% +/-(1YR)%
UK 100 INDEX (Close) 7,510.20 77.80 1.04 0.95
CAC 40 INDEX (Close) 5,493.49 87.35 1.61 2.67
EUROSTOXX 50 (Close) 3,399.20 7.33 0.21 -5.64
Asia/Far East Value Change +/-(1M)% +/-(1YR)%
SHANGHAI COMPOSITE (Close) 2,821.35 96.10 3.52 -16.39
NIKKEI-225 (Close) 24,120.04 1254.84 5.20 18.23
ASX 200 (Close) 6,207.60 -220.20 -3.42 8.35
HANG SENG (Close) 27,788.52 100.08 0.36 -1.36

United Kingdom

Sentiment towards UK equities is cautious in the absence of progress towards an EU Brexit deal. The PM’s “Chequers” plan promised regulatory alignment with EU rules in return for EU single market access. It was rejected at Salzburg. Sterling has remained weak, with half-hearted rallies. We think a “no deal” outcome would prompt the PM’s resignation and a possible General Election.

Banks had a poor month due to margin compression, and evidence of weakening credit demand. There is concern the next 6 months i.e. ahead of Brexit could see a marked consumer slowdown impacting mortgage and loan demand. A separate factor is weak emerging markets which hit Standard Chartered and HSBC.

The Barrick/ Randgold Resources nil premium merger might face shareholder opposition given the tight terms. UK investors are being offered Barrick shares (down c.70% since 2011). Barrick needs to replenish gold reserves having spent five years disposing of producing mines to reduce debt. Terms may be sweetened to get Randgold shareholders onboard.


Is it right for China to be treated as the emerging market epicenter? The sell-off in Chinese stocks since January was briefly a 20% “crash” early last month. US trade tensions, a slowing Chinese economy and perennial worries about bad debts/ valuations have kept buyers sidelined.

Chinese technology stocks, known as the “BATs” (“Baidu, Alibaba and Tencent”) have lost c. $165bn year to date. The worst hit, Tencent has been hit by slower regulatory approvals with the government concerned about eye problems being caused by gaming. Growth rates are impressive, Tencent has grown 30% year on year, vs Baidu up 32% and Alibaba up 62%. Tencent is pushing WeChat and WeChat Pay alongside its gaming business. The big advantage in China for the local techs is the absence of US competition, Google withdrew in 2010, Facebook is blocked and Netflix is not available. Apple does operate in China on a very small scale.

However a meaningful rebound in Chinese BATs and the broader market is seen as dependent on a Sino-US trade deal that remains elusive.


The Italian problem is centre stage for the Eurozone. But there is division in Italy at its new government’s antagonistic EU stance. The Italian president, Sergio Mattarella and central bank governor, Ignazio Visco warned against the new government’s plan to lift spending to 2.4% of GDP (0.8% was the previous administration’s target). The problem is existing debt at 131% of GDP must be brought down but this is not consistent with the €28bn in tax cut promises made by the new government.


The jump in Italian bond yields reflects the lack of confidence in the new government which by blaming the EU for years of overspending is making the problem worse by alienating Italy’s only likely saviour.

United States

The Federal Reserve embarked on its plan to reduce its balance sheet by c. $50bn per month alongside tightening monetary policy. The Board is agreed, the US economy no longer needs “accommodative” monetary support. The Fed is concerned that average earnings growth (2.9% in August) and declining unemployment will push up inflation. So far it has despite changes in the labour force, with highly paid Baby boomers retiring and being replaced by lower paid Millennials which creates a drag on pay growth.

The Dow Jones (+73.64%) has sharply outperformed the MSCI Emerging Markets Index (0.21%) over the last 5 years.


Subscribe to our Award-winning Newsletter

We provide daily market data in the form of our award-winning newsletter, The Morning Call and The Market Close.
You can subscribe to this information at any time to help you make the most of your investment.

Quick Sign-up

Important Information

Key to Material Interests:

Please be aware that the following disclosures of Material Interests are relevant to this research note:

Standard Chartered                Relevant disclosures:   <2>

HSBC                                            Relevant disclosures:   <2>

Goldman Sachs                        Relevant disclosures:   <NA>

Jardine Lloyd                           Relevant disclosures:   <NA>

Barrick Gold                             Relevant disclosures:   <NA>

Randgold Resources              Relevant disclosures:   <2>

Baidu                                           Relevant disclosures:   <2>

Ali Baba                                      Relevant disclosures:   <2>

Tencent                                      Relevant disclosures:   <NA>

Facebook                                   Relevant disclosures:   <2>

Netflix                                        Relevant disclosures:   <2>

  1. The analyst has a personal holding in the securities issued by the company or of derivatives linked to the price of the company’s securities.
  2. Collins Sarri Statham Investments Ltd has clients who hold either shares or CFD positions in this security.

Analyst Certification:

The report’s author certifies that this research report accurately states his personal views about the subject securities, which is reflected in the ratings as well as the substance of the reports.


Collins Sarri Statham Investments Ltd (CSS) does not in any of its publications take into account any particular recipient's investment objectives, financial situation, and specific needs and demands. Therefore, all CSS publications are, unless otherwise specifically stated, intended for informational and/or marketing purposes only.CSS shall not be responsible for any loss arising from any investment based on a perceived recommendation.

No publication (including recommendations) shall be construed as a representation or warranty that the recipient will profit, nor avoid sustaining losses, from trading in accordance with a trading strategy set forth in a publication.

This research is non-independent and is classified as a Marketing Communication under FCA rules detailed in their Conduct of Business Rulebook (COBS). As such it has not been prepared in accordance with legal requirements designed to promote independence of investment research and it is not subject to the prohibition of dealing ahead of the dissemination of investment research outlined in COBS 12.2.18.

Risk Warning:

Trading in the products and services offered by Collins Sarri Statham Investments Ltd (CSS) may, result in losses as well as profits as the value of investments may go down as well as up. You may not get back the full amount you have invested. Any reference to past performance should not be viewed as an indication of any future performance. Investments held in overseas markets are subject to the effects of changes in exchange rates which will impact on the value of the underlying investment. Investments made in AIM and penny shares carry an increased risk due to the difficulty in creating a market in these shares. There may be a substantial difference in the buy and sell price. Leveraged products such as Contracts for Difference (CFDs), derivatives, commodities & Foreign Exchange (FX), carry a higher risk to your capital and they can lose their value rapidly.

Speculative Trading is not Suitable for all Investors

The information contained herein is based on materials and sources that we believe to be reliable however we make no representation or warranty, either express or implied, in relation to the accuracy, completeness or reliability of the information contained herein. Please note that the figures shown may, in some instances, be rounded to the nearest penny. Prices can move sharply from those quoted in this document. Current prices can be verified by calling one of our brokers. CSS is under no obligation to update the information contained herein. Neither CSS, nor its affiliates, nor its employees shall have any liability whatsoever for any indirect or consequential loss or damage arising from the use of this document.

Get Started with CSS

Open an Account

Subscribe to our award winning daily newsletter

Voted "Best Market Newsletter" in 2012, 2014, 2015 and 2017 by the City of London Wealth Management Awards

Subscribe to our newsletter (Popup)

By signing up to our free email, you are consenting to receive these promotions. The newsletter is sent up to three time per day during the week and up to once per day over the weekend. The newsletter contains company news, market movements, CSS research and promotions and breaking economic news. Occasionally our newsletter will contain advertisements from trusted partners. However, we will never give, sell or rent your email address to any other companies. If you want to stop receiving our free emails you can unsubscribe at any time by clicking on the link at the bottom of each email. You can read our privacy policy here.

No, thank you I am already subscribed