August starts quietly

The first week in August started very much in holiday mode. The government ensured investment bankers has headed of to sunnier climes in good cheer as it announced the government had started to sell down its stake in RBS. A lot was made in the press of the fact that the sale process has started well below the governments in price of 502p. The government owned 78% of RBS, effectively making a state owned entity. To encourage institutional investors to buy shares the realty was that the process was likely to start below break-even. The hope will be as the free float increases and the government influence reduces, investor appetite will increase along with the share price.  This will offer the government the opportunity to sell at better prices in the future.

 

Apple has become the latest focus amongst investors as the share price has fallen nearly 15% from its recent highs. Apple shares make up something in the region of 4% of the market capitalization of the S&P 500. Apple is approximately 14% of the Nasdaq index. The stock broke its 200-day moving average on Monday, considered significant for technical analysts. Some investors will fear that should the largest stock in the index fall, the index itself will follow.

 

Sentiment as to when the Federal Reserve will move on interest rates changes almost daily. On Tuesday Dennis Lockhart, president of the Atlanta Fed, said there would need to be a “significant deterioration* in economic activity to prevent the central bank from moving after its next policy meeting. Traders, according to the FT, are now split 50-50 on September being the month for the much-anticipated move. We have no doubt central bankers want to start raising rates as soon as possible; the upcoming economic data will be studied even more acutely in the weeks ahead of the meeting. 

Posted on August 4, 2015 .