A weekly run through of the key UK and US indices, from Opto.
Barring a slight drop between 6 February and 8 February, the last three weeks have seen the FTSE 100 performing strongly. Since 28 January, the index has increased 7.3%, including a 2.34% jump during the week ending 15 February, a run that looks set to continue for the first part of this week.
After high-level meetings concluded in Beijing last week, President Donald Trump said that the US-China truce deadline could possibly be extended beyond its 1 March deadline. The outlook for an extension started looking far more certain around the middle of the week with the index growing 1.44% from Wednesday’s opening of 7133.14p.
The shift shows progress, but reflects City Index analyst Fiona Cincotta’s feeling that a significant breakthrough was unlikely to happen.
“The reality is that we are unlikely to see any big moves towards a deal this week,” Cincotta said. “The market is not pricing in the hike in tariffs and the damaging consequences on the Chinese and global economy.”
“The reality is that we are unlikely to see any big moves towards a deal this week,” Cincotta said. “The market is not pricing in the hike in tariffs and the damaging consequences on the Chinese and global economy.” - City Index analyst Fiona Cincotta
Last week saw a string of positive earnings announcements with interesting performances across the board. The Royal Bank of Scotland Group [RBS] beat analysts’ revenue predictions by £400m, as its net income reached £1.62bn for 2018. At the start of the week, RBS’ stock opened at 238.7p and closed at 247.8p showing a 3.81% increase.
Elsewhere, Evraz [EVR] and The Wood Group [WG] were both up across the five days. While Standard Life Aberdeen [SLA], Micro Focus International [MCRO] and Centrica [CNA] all fell, with the former sliding heavily between Thursday and Friday, dropping 6.31% from 249.45p to 233.7p.
Apart from a couple of minor hiccups, the S&P 500 has seen steady growth since the turn of the year. The week ending 15 February was no different and the US index was up 2.49% from $2708.07 to $2775.60.
However rising market concentration is causing analysts to suggest that the future of the index could be problematic. “In fact, the longer this goes on, more stocks in the index become irrelevant to the index’s performance,” chief investment officer at Sungarden Fund Management, Rob Isbitts, said. “This is not a problem…until it is.”
Those words were echoed by Goldman Sachs analysts who warned investors that, despite a strong run so far in 2019, the S&P 500 was set to return to far more modest levels of growth.
The Dow Jones had a mixed week, starting far more bullishly than it ended. From opening on a week-high of $25,598.01, the index posted a 1.96% rise on Wednesday 13 February.
Gains made by the Dow Jones on Wednesday 13 February
With trade talks between the US and China recommencing this week in Washington, the Dow Jones looks set to benefit if the deadline is extended beyond 1 March. However, Trump’s threat of declaring a state of emergency over his proposed border wall could affect markets.
The Nasdaq suffered from the Commerce Department reporting difficult US retail sales in December. It was, however, the more resilient US index rising 2.08% through the week ending 15 February.
The week’s big winner was electric car manufacturer Arcimoto [FUV], which rose 48%, seemingly boosted by the launch of its new three-wheeler vehicle to the market. The Oregon-based business is branding itself as a competitor to Tesla, though it is certainly not in the same league financially.
Last week's gains made by Arcimoto stock
PepsiCo [PEP] rebounded after a poor week with its earnings announcement falling in-line with expectations for the quarter, posting a week-long rise of 2.43%.
Investors with interests in the Nasdaq will certainly be watching the US-China talks closely. Ties between the two are crucial for low manufacturing costs, though the tech battles between the US and China rages on with Apple [AAPL] and Huawei fighting it out for market share.