"We’re not there yet." This was Thursday’s message from Mario Draghi, the President of the European Central Bank (ECB), as he put off any decision on curtailing the ECB’s monetary stimulus program. Citing low inflation, Draghi said that “we need to be persistent and patient and prudent.”
Somewhat perversely, the Euro rocketed in response, rising to an eight-month high against the British Pound and close to a two-year high against the U.S. dollar. Despite Draghi refraining from pointing to future tightening, the currency markets reacted as if he had. With the ECB now widely expected to announce in the autumn that its bond purchases will be reduced from January, investors seem to feel that winter is on its way.
(Almost) everything is awesome
Although the Euro’s late surge caused European stocks to fall back at the end of the week, most of the world’s stock markets showed little sign of slackening their pace. Major indices registered a succession of fresh highs. Plump corporate profits were a major factor in the global stock-market surge.
In the U.S., the Dow Jones, the S&P 500 and the NASDAQ indices all set new records. In Asia, Japan’s Topix and Hong Kong’s Hang Seng hovered around their two-year highs. The UK’s FTSE 100 index joined the party too, with the weak pound helping its overseas earning constituents and strong Chinese gross domestic product (GDP) figures boosting the share prices of its mining companies.
The NASDAQ’s record-breaking run came as a number of tech stocks continued to shrug off last month’s concerns about their eye-catching valuations. This enabled the index to not only reach new highs, but also to record 10 days of successive gains for the first time since February 2015.
The FANG stocks led the charge, with all-time share-price records set by Facebook, Amazon, Netflix and Google (also known as Alphabet, but FANA was probably a less catchy acronym). Netflix beat expectations in its quarterly earnings and announced that it had added 5.2 million members – some two million more than the consensus estimate.
Nor was the tech surge limited to the U.S. China’s Tencent, which is listed in Hong Kong, also hit an all-time high during the week. Its Chinese internet peer Alibaba did likewise.
It’s not just the tech stocks themselves that are benefiting from the current vogue for the digital economy. One of the most eye-catching climbers on Wall Street this week was department store operator Sears. Its shares were up by over 20% at Thursday’s close, on news that its Kenmore appliances are to be sold through Amazon.
It’s not just the tech stocks themselves that are benefiting from the current vogue for the digital economy.
Directly down – and up
There was less happy news for one UK retailer, however. Sports Direct, purveyor of athletic footwear, announced in its annual results that profits had fallen by almost 60%. But investors were likely in a mood to let bygones be bygones. After the announcement of a change in the company’s finance director, shares in the company rose by more than 13% at Thursday’s close.
Technology may be all the rage on Wall Street, but it doesn’t always perform as planned. This week saw the news that a robot security guard had apparently committed suicide in Washington DC. It’s unclear whether political news or presidential tweets played any part in prompting Steve, a Knightscope security robot, to plunge headfirst into a fountain. But that’s where he was found, face down and wheels up, outside the office he was supposed to be guarding. Before we go too far in pondering cybernetic seppuku though, we should consider a more prosaic possibility. Like the Daleks before him, Steve may simply have been unable to cope with stairs. Whatever the truth, we hope he’s droid out now.
Indices are unmanaged and have been provided for comparison purposes only. No Fees or expenses are reflected. You cannot invest directly in an index.
Companies mentioned for illustrative purposes only and should not be taken as a recommendation to buy or sell any security. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list.
Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks may be enhanced in emerging markets countries.