UK stocks up this morning as Brexit talks resume

UK stocks up this morning as Brexit talks resume 150 150 Realm

This morning UK stocks are attempting to add to gains made yesterday following last week’s falls. Brexit talks resume today and the Pound has been heading lower over the last few days in anticipation of difficulties in the negotiations. The US/China relationship is also under strain again with China accusing the US of bullying tactics in trying to get other countries to block Chinese tech companies. 


Global Macro

  • China’s foreign exchange reserves rose to USD 3.165 trillion in August of 2020, the highest since December 2016, from USD 3.154 trillion in the previous month but below market expectations of USD 3.176 trillion. Meanwhile, the value of gold reserves edged down to USD 122.62 billion at the end of August from USD 123.09 billion at the end of July.
  • The Halifax house price index rose 5.2 percent from a year earlier in August of 2020, the largest annual increase since late 2016, as a surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and the temporary cut to stamp duty. On a monthly basis, prices went up 1.6 percent, slightly above forecasts of 1.5 percent. The average price of a property reached over £245,000 for the first time on record. “Notwithstanding the various positive factors supporting the market in the short-term, it remains highly unlikely that this level of price inflation will be sustained. The macroeconomic picture in the UK should become clearer over the next few months as various Government support measures come to an end, and the true scale of the impact of the pandemic on the labour market becomes apparent”, Russell Galley, Managing Director at Halifax said.
  • Imports to China unexpectedly fell by 2.1 percent year-on-year to USD 176.3 billion in August of 2020, missing market expectations of a 0.1 percent gain and following a 1.4 percent drop a month earlier. This was the second straight decline in imports, due to weak domestic consumption. Compared to the previous month, imports fell for major commodities including crude oil, iron ore and soybeans. Imports of copper were down 12.3 percent from a record high in July, but were still up by 65.5 percent from a year earlier. Imports of crude oil were 47.48 million tonnes in August, down from a record high in July but increased 12.6 percent from a year earlier. Iron ore imports fell 10.9 percent to 100.36 million tonnes, easing from a record high on fewer shipments from big miners and port congestion, but were still 5.8 percent higher over a year earlier. Purchases from the US went up 2 percent to USD 10.5 billion and those from the European Union plunged 29.7 percent.
  • Exports from China soared 9.5 percent year-on-year to USD 235.3 billion in August of 2020, above market forecasts of a 7.1 percent growth and after a 7.2 percent rise a month earlier. This marked the third straight month of increase in overseas sales and the fastest rate since March of 2019, amid further improvement in global demand as more countries lifted coronavirus-led restrictions. Chinese exports have been boosted by record shipments of medical supplies and robust demand for electronic products. Sales of refined products increased 33.1 from the previous month and those of unwrought aluminium and products went up 6.87 percent. In contrast, shipments fell for steel (-0.62 percent), rare earths (44 percent) and grains (-36.77 percent). Exports to the United States rose 20 percent to USD 44.8 billion while those to the European Union declined 20.1 percent to USD 35.7 billion.
  • On Monday: European stocks stocks rallied sharply and most importantly, held on to their gains and closed on a high note, as investors indulged in some hectic buying almost across the board after recent setbacks. US stocks (closed due to labour day). Asian stocks ended mostly lower following mixed trade data released by China and on worries about rising U.S.-China tensions after Reuters reported that the U.S. government is considering adding China’s largest chipmaker Semiconductor Manufacturing International Corp. or SMIC to a trade blacklist.

Disclaimer:  ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy. This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’