There may be storms over the east coast of America, however leading developed equity indexes remain calm. There is still plenty for equity investors to focus on, and possibly fret over, and this may have been reflected in the Vix index late on Tuesday. The Brexit process can now start after yesterday’s vote in the houses of parliament. Nicola Sturgeon used this as an excuse to get herself back into the headlines calling for another referendum on Scottish independence. Sterling took another hit, the time for sterling to recover could well be once article 50 is officially triggered. Brexit aside, politics continues to dominate as the much-anticipated Dutch elections take place tomorrow. Tensions between Europe and Turkey continue to rise. The French election appears to be descending into a true French farce. The reforming of America’s healthcare act continues to make headlines.
There is also no shortage of economic data. A mixed picture from China as they released their latest batch of economic reports. Retail sales for the first three months of the year came in below expectations. However, Chinese industrial production beat expectations hitting a six-month high. In the Eurozone economy Germany’s consumer price index hit 2.2pct year on year, the highest reading since August 2012. Later today we will have had the decision from the Federal Reserve as well as the results of the latest Monetary Policy Committee meeting.
The weakening oil price was something we referred to at the start of the week. This weakness is taking the blame for the weakness in the Russell 2000 index of smaller cap companies. Fund managers often look to the performance of the smaller capitalised stocks to lead the big caps. The Russell 2000 index is now down on the year!
Inflation that was not so long ago thought as a phenomenon of the past, now appears to be cropping up everywhere. Consumer prices in Poland rose faster than expected last month to hit a fresh four year high. Core inflation, when stripping out the impact of oil, does however paint a slightly different picture. For example, core inflation in Europe remains below 1%. For this reason central bankers, aside from possibly Janet Yellen feel they can wait before raising rates. The recent fall in the oil price should reinforce those views and may even allow Janet Yellen to moderate her comments tomorrow.
Mergers and acquisitions have been picking up within UK companies this year, this week we have had two alone. The first one was the possible acquisition of Bovis by Redrow, the second between Wood Group and Amec. We were asked to give our thoughts on Monday on the possible Bovis acquisition on Share Radio. We have attached the link to the piece, and we will be appearing at 5pm later today to give a roundup of our thoughts on the day’s events.
Nigel Cassidy, Share Radio Breakfast
Paul Sedgwick, Head of Investments at Frank Investments joined Nigel Cassidy and Rachel Winter from Killik & Co to discuss all the top business and finance stories from the weekend and today. First up, they analysed why Bovis homes have been seeing significantly lower share prices than its counterparts as of late. Published 13 Mar 2017