TIME IS RUNNING OUT FOR A POST-BREXIT DEAL
Weekly Market Commentaries
TIME IS RUNNING OUT FOR A POST-BREXIT...
Data Sourced from FE Analytics, and Bloomberg Finance LP
This week while coronavirus still had most people's attention, we also found room to start talking about Brexit again. A small glimpse of back to normal, but not exactly a marked improvement. The time to secure a deal before the transition period ends is diminishing rapidly and the issues involved will require more time to be considered than is currently available. The consequences of diminished UK trucking access to the continent were the focus this week, but all industries have their own specific regulations and issues that will be impacted.
Despite the years' worth of talks and only months' worth of time, an extension seems unlikely. The Brexit proponents in the government fear any delay will turn out to be perpetual. This is reasonable, as the easiest solution is to put off leaving and avoid the consequences, it's an easily imaginable scenario. Thus the best way to avoid it is to agree a deal now, however basic, as it can always be amended later. While the threat of no deal feels like its been hanging over us forever, it still seems far less likely than a bad deal.
US: TECH STOCKS HELP PUSH S&P 500 TO RECORD HIGH
This week the S&P 500 erased all its losses from the coronavirus sell-off to set a new all-time high. The previous high was set on 19th February, the day before the four-week sell-off, which wiped 33 per cent off the index. It has taken just six months for the market to recover all those losses and it is currently up more than 5 per cent year to date.
A large portion of the gains have come from the US tech giants which have come to dominate the index. The S&P 500 Communications and IT Index is up by 23 per cent so far this year but several tech giants are up by considerably more. Amazon and Apple, for example, are currently up 73 per cent and 56 per cent respectively and Apple became the first US company to achieve a market value of $2tn. It took the company 41 years to reach $1tn but just two to add the second $1tn to its market cap.
UK: RESIDENTIAL PROPERTY SALES SURGE FOLLOWING LOCKDOWN
House buyers have shrugged off the recession and rising job losses as estate agents and house builders have reported a mini boom in house sales in July. Online property listing portal Rightmove said July was the busiest single month in
the last decade as a combination of three months of pent up demand, record low borrowing rates and a temporary stamp duty exemption contributed to a spike in sales.
House builder Persimmon's second quarter stock market update reported sales since the beginning of July were up 49 per cent on last year. Although it said half year profits are down 43 per cent, it has restored its dividend as forward sales are up 25 per cent to £2.5bn. Persimmon has been the best performing house builder in 2020. Although it is still slightly down for the year, it is up 73 per cent from its March low and is up 45 per cent over 12 months.
AIRBNB: HOME RENTALS COMPANY LOOKS TO IPO AS IT BUCKS THE TRAVEL TREND
Airbnb is gearing up to defy the global downturn in the travel industry and has filed for a stock market listing in the US. The home-rental company has been
expected to list on the stock market for some time. The CEO recently said the company was preparing for an IPO in March when the coronavirus pandemic struck. It has now filed paper with the financial regulators in advance of an expected listing later this year.
Airbnb has not been spared by the economic shutdown and downturn. It cut its workforce by 25 per cent in May and stopped all its marketing to save money, but it has reported a recent surge in domestic bookings as foreign travel is curtailed. Additionally holiday makers have been seeking out self-catering options to minimise the risk of coronavirus infections. Earlier this year the company raised $2bn in a bond issue which valued it at $18bn. If the flotation is successful it will follow several other successful technology-led IPOs in 2020, including online car retailer Vroom and Zoominfo.
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