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.
Global interest rates headed down in September. The US Fed cut federal funds by 0.25% to a range of 1.75%-2% whilst the ECB cut deposit rates by 0.1% to -0.5% and will restart a €20bn monthly bond buyback.
Thomas Cook declared insolvency after a rescue effort over 28th-29th September failed to find the requisite £200m in extra funding requested by RBS. The package holiday group sold 22m holidays in 2018.
President Trump is facing a Congressional Impeachment inquiry after a whistleblower reported to Congress having witnessed Trump abusing his powers by seeking to pressure a foreign leader to open an inquiry into former US Vice President Joe Biden.
Hong Kong Exchange made a takeover approach to the LSE, which was promptly rejected. The board of HKEX has since said it will woo LSE holders with an improved offer.
The Financial Reporting Council (FRC) has issued a revised going concern standard following a spate of corporate failures in which auditors had failed to flag up concerns about the company’s viability.
IAG updated investors to expect 2019 operating profits of €3.27bn saying recent strikes cost €170m.
UK government declined to provide financial assistance to Sirius Minerals during its talks to secure US$500m of extra bond financing from investors.
Prudential expects to divest its M&G fund management business no later than the 21st October.
|1 October||Markit / CIPS Manufacturing PMI|
|2 October||Construction PMI / BoE FPC Meeting|
|3 October||Markit / CIPS UK Services PMI|
|4 October||UK New Car Sales/ 10 YR Gilt Auction|
|7 October||Halifax House Price Index|
|8 October||UK Labour Productivity Q2|
|10 October||UK Balance of Trade August/ UK Manufacturing Production|
|15 October||UK Claimant Count Change/ BoE Minutes/ UK Unemployment Rate|
|16 October||UK Core Inflation/ PPI Input September/ UK Retail Price Index|
|18 October||UK Retail Sales|
Public Sector Net Borrowing
|DOW JONES (Close)||26,916.83||513.55||1.90||3.70|
|S&P 500 (Close)||2,976.74||50.28||1.70||1.90|
|UK 100 INDEX (Close)||7,408.21||201.01||2.80||-0.30|
|EUROSTOXX 50 (Close)||3,569.45||142.69||4.20||5.20|
|SHANGHAI COMPOSITE (Close)||2,905.19||18.95||0.07||6.60|
|HANG SENG (Close)||26,092.27||367.57||1.40||-6.40|
As October 31st approaches, could it be that investors are taking a sanguine, long term view whatever the outcome? Key to this perception is the view that Johnson, unlike May, will not seek to extend EU membership, come what may.
The September rally, a 201 point gain, from oversold levels during August suggests investors remain cautiously optimistic of an agreed Brexit deal. It might be heretical to say this, but could October 31st come and go without drama? It is possible. Volatility has been declining. It seems likely there will be Brexit “stabilisers” in the form of lower interest rates, according to Mike Saunders, BoE MPC member.
Airline / holiday companies, Dart Group, Easyjet, Ryanair, TUI were the major beneficiaries of Thomas Cook’s collapse rising c. 12%-15%. All UK providers should see increased market share and higher prices given the loss of Thomas Cook’s cheap short haul capacity. A second order effect will be the easing of staff shortages/ pressure on airline pay. Brexit is likely to impact the sector if sterling rises back to US$1.30.
Ahead of the PRC’s 70th birthday the Beijing government made a significant concession in withdrawing its controversial extradition bill. This would have deprived Hong Kong citizens of their rights to a fair trial by making it possible to legally extradite them to China. However celebrations were short lived. Hong Kong’s young protestors responded by with further demands including an amnesty and political change. The episode demonstrates both deep social problems integral to Hong Kong’s organization and also the demands for democratic reforms and accountability which have fallen on deaf ears for well over a decade. The HK protests suggest deeper social reforms are required which look undeliverable.
Jack Ma, China’s wealthiest individual and illustrious founder of Ali Baba stepped down handing the reins to Daniel Zhang who “has the critical thinking skills of a super computer” according to Ma. US investors have been cautious about Ma’s exit sending the shares down to $167 some way from $195.72 highs in early May.
The ECB’s move to reduce the deposit rate to -0.5% and embark on a new round of bond purchases has impacted bond yields with negative yields remaining all the way along the curve. The ECB left its benchmark rates at 0% rather than imposing negative rates on savers.
Pressure is growing on Berlin to provide fiscal stimulus as a means of boosting GDP growth and countering the China induced export slowdown. This is despite the 2009 “debt brake” which limits the federal structural deficit to 0.35% of GDP. Whether Chancellor Merkel will embark on payroll tax cuts will possibly depend on Q3 GDP growth (likely to be negative) and internal pressures within the CDU.
US markets are shrugging off President Trump’s impeachment saga, due to the Republican Senate majority. The Congressional impeachment inquiry could dominate the news for the rest of 2019. The handling already looks un-presidential with Trump accusing people of treason and demanding to meet the whistleblower. At the heart of it appears the odd position of a US President asking foreign leaders for help attacking US politicians.
US techs lagged blue chips over September, exemplified by the Microsoft $40bn share buyback (3.8% of share capital) and 11% dividend hike which elicited only a muted response. Microsoft reported revenues jumped 12% over the Q2 2019 period. Apple Inc climbed 9.3% to $224 per share over September helped by the iCard launch.
Carnival Corp reported Q3 EPS of $2.58 v $2.41 but revised down EPS guidance for 2019 to US$4.23-US$4.27 sending its shares down 12%.
Despite the Fed’s rate cut, the US yield curve remains inverted between the 3 month and 10 year maturities. The plan to introduce a 50 year and 100 year US Treasury bond is under consideration and might help restore a normal yield curve, when it arrives.
Please be aware that the following disclosures of Material Interests are relevant to this research note:
LSE Relevant disclosures: <2>
Prudential Relevant disclosures: <2>
Sirius Minerals Relevant disclosures: <2>
IAG Relevant disclosures: <1,2>
Ryanair Relevant disclosures: <2>
Easyjet Relevant disclosures: <2>
Dart Group Relevant disclosures: <2>
Ali Baba ADR Relevant disclosures: <2>
Microsoft Relevant disclosures: <2>
Apple Inc Relevant disclosures: <2>
Carnival Relevant disclosures: <2>
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.
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.
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.