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Hanging in the balance

Global stock markets experienced a midweek sell-off last week with major indices trading 3-5% lower over the course of Tuesday / Wednesday before recovering some of those losses towards the end of the week.

Overall, stock markets feel like they're currently hanging in the balance with positive and negative news flow cancelling each other out for the time being. We wanted to start by giving you a quick summary of what's been helping and what's been hurting so that you're on the ball with respect to your own investment portfolio. 

What's helping

  • Positive economic data. US consumer spending seems to have rebounded in May with household spending climbing 8.2% despite average household incomes having declined 4.2% over the same period. Those 'stimulus checks' look like they're starting to help the US economy. Elsewhere, the Eurozone economy also began showing signs of recovery, with PMI data for June coming in well above the prior month and also ahead of consensus expectations.

What's hurting

  • That second wave. Surging cases in large US states including Texas, Arizona, Florida and California are keeping investors on edge given a potential return-to-lockdown scenario could still be feasible. And the US is not alone. Many other parts of the world are experiencing signs of a potential second wave of infections following the recent easing of lockdown measures across Europe and Asia. On balance, it feels like even with a new rise in cases, the socially distanced world is where we will remain for the foreseeable future. Many governments simply can't afford to keep pumping in the levels of stimulus needed to keep countries going as they did between March - May. But we think it's safe to say the situation definitely remains messy. 

Potential economic data flash points coming up

There are also a few bits of economic data coming up which might be worth keeping an eye on given their market-moving potential. We've shortlisted them below for quick reference: 

  • Tuesday 30 June

    • UK GDP for Q1 2020

    • Eurozone inflation data for June

    • US Fed Chairman Jerome Powell & Treasury Secretary Steven Mnuchin due to speak

  • Wednesday 1 July

    • Chinese Manufacturing PMI data for June

    • US Manufacturing PMI data for June

    • European unemployment data for June

  • Thursday 2 July

    • US Employment Report for June, including non-farm payrolls, the latest unemployment rate and average hourly wages data. This was a major market mover last month after announcing an unexpected improvement in the US labour market - one to watch. 

Single-stock highlights

All of the above relates largely to top-down / macroeconomic drivers of financial markets, and while it's important, there were also some notable single-stock related stories this past week. 

We've picked out some of the most interesting things going on with individual companies and created a shortlist for you to go and do further digging into, should you feel inclined to do so!

  • Wirecard - we covered this last time but the fallout has been nothing short of dramatic all week long, with the company going from a German financial heavyweight to a penny stock in just one week. The shares are trading more than 95% (!) lower than they were a week ago as the company looks set to enter bankruptcy. 

  • H&M - announced a pre-tax loss of roughly $700m for the second quarter of 2020. The company's first quarterly loss in decades prompted it to start the process of issuing it's first ever set of bonds in coming weeks. It's shares are trading roughly 30% lower this year-to-date.

  • Boohoo - in stark contrast to H&M and other brick and mortar based retailers, Boohoo has been one of the e-commerce winners as consumers switched shopping away from stores towards online. It's shares trade near all-time highs at the moment having gained c. 35% so far this year, and the company announced plans to pay bonuses of up to £100m for it's founders and £50m for other executives based on share price performance. Shareholders weren't given the option to vote on these proposed pay packages, which left many feeling unimpressed.

  • Amazon - just another average week here for the behemoth in which it purchased Zoox, an autonomous driving startup for what has been speculated to be an investment of over $1 billion. Separately, it also looks like Amazon has been given the green light to increase it's stake in Deliveroo, a UK-based food delivery company. Putting 2 and 2 together here, it looks like - for better or worse - we're inching closer towards a world in which robots, not humans, deliver our take away meals (and probably everything else, too). 

  • Facebook - in the news for all the wrong reasons yet again. The company has come under fire for it's (mis)handling of hate speech as well as Zuck's (frankly ridiculous) decision to leave factually inaccurate and divisive content posted by Donald Trump on it's platforms. Several large brands including Ben & Jerrys, The North Face and Verizon have boycotted advertising on Facebook as a result, and the trend seems to be growing with more brands joining in each day. Seems like investors weren't too impressed either - facebook shares were down around 10% over the last week. 

  • Aston Martin - the struggling premium carmaker plans on raising another £260m to help turn the business around. £190m of that will come via selling new shares worth around 20% of the business while the rest will come via high yield debt financing. The stock dropped c. 26% last week, and trades at around 50p now versus the roughly 175p it was worth at the start of 2020. Rough times ahead, it seems.

  • Tesla - being sued for an airbag malfunction in the Model 3 and potentially facing regulatory scrutiny over the safety of its vehicles. Investors didn't seem too bothered by the news though, with the stock trading comfortably within the $950 - $1000 range all week.

Please know, the value of investments can go up as well as down and you may receive back less than your original investment, meaning, when investing your capital is at risk.

Disclaimer: At Evarvest we believe in making investing and investment education more accessible, but we don’t provide investment advice and individual investors should make their own decisions. While we try our best, we cannot ensure the accuracy of the information we provide.

This content is copyright protected by Evarvest Limited (12544579). Evarvest Limited refers to the Evarvest network and/or one or more of its subsidiaries, each of which is a separate legal entity. 

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