Euro pares losses
The Euro has pared its losses and filled the gap formed against the dollar on the open following the announcement of the Greek referendum.
‘It looks like a bit of stability has returned after the earlier onslaught, so I’d say there was a bit of profit-taking, given that we are very much in a state of flux’ RBC Capital said to Reuters.
The EUR/USD fell as low as 1.0954 in Asian trading but rebounded in early European trading. The upcoming Non-Farm Payrolls is likely to provide some stability in the pair as traders position themselves for a shift in rate hike expectations.
British mortgage approvals fall in May
Mortgage approvals fell in May, according to data released this morning by the Bank of England.
The drop surprised analysts, going against recent signs indicating that the housing market has picked up over the last few months.
Mortgage approvals for house purchases numbered 64,434 in May from 67,580 in April. Analysts in a Reuters poll had forecast 68,700 mortgage approvals were made in May.
According to the B of E figures, growth of consumer lending has also slowed; however lending to non-financial businesses rose by 713 million pounds, recovering around half of April’s 1.473 billion pound dip.
Global stock markets slide as hopes of Greek deal fade
Stock markets throughout Europe and Asia have suffered in the wake of an announcement by Greece on Sunday that banks will remain closed for the next six days.
The FTSE 100 fell 2% in early trading this morning, with travel and leisure stocks leading the fall; events in Greece, as well as holiday companies evacuating tourists from Tunisia after Friday’s terrorist attacks, have both had an impact.
Japan’s Nikkei index, Germany’s Dax index and France’s Cac 40 all fell nearly 3% this morning, and the Athens Stock Exchange is closed all week.
Greek banks to close all week
The Greek government has an announced that banks will stay shut all week, after a decision by the ECB not to extend emergency funding.
In a televised address on Sunday night, Prime Minister Alexis Tsipras said there was an “extremely urgent” need to protect the financial system and guard against the banks collapsing through mass withdrawals. It was confirmed that there will be a withdrawal limit of 60 euros a day in place throughout this period.
Greece has 48 hours to pay back 1.6 billion euros to the IMF; however, hopes of reaching a deal with international lenders before this time are sinking fast. Tsipras has announced a snap referendum next Sunday on the terms of a cash-for-reforms deal, angering creditors and prolonging the negotiation process.
“I can’t believe it,” Athens resident Evgenia Gekou, 50, told the BBC. “I keep thinking we will wake up tomorrow and everything will be OK. I’m trying hard not to worry.”
China’s Premier says economy is on the up
China’s premier, Li Keqiang, told state-owned China Central Television today that the economy’s fundamentals were good and major indicators were improving, despite the Shanghai Composite falling 7% this morning.
“Currently China’s economic fundamentals are good. Main economic indicators such as industrial output, investment, consumption, exports and imports have stabilised and showed improvements since May,” Li was quoted as saying.
“Employment is stabilizing and increasing. The economic performance is within a reasonable range.”
The government will strengthen targeted policy adjustments, Li said, adding that China was able to maintain a mid to high growth rate.
The central bank has recently cut interest rates to lower borrowing costs and encourage more lending, and most analysts expect the central bank to loosen policy further still. Li continued that the government would strengthen targeted policy adjustments, adding that China was able to maintain a mid to high growth rate.
London’s Silicon Roundabout leads Europe’s tech scene
Almost five years since David Cameron and Boris Johnson launched the ‘Tech City’ initiative, London’s tech scene has grown to become the most important tech hub in Europe.
London’s Silicon Roundabout is hot on the heels of Silicon Valley, with almost half of Europe’s billion dollar tech companies founded in the UK. These so called ‘unicorn’ companies, aptly named for their near mythical status, are born when start-up companies receive enough venture capital investment to be valued at a billion dollars.
The UK has produced 17 unicorns since 2000, with a total valuation of more than $40bn – FinTech’s crowdfunding website Funding Circle and online clothing retailer ASOS are just two of those. Other unicorns include JustEat, Skrill, Wonga, Zoopla, Farfetch, Transferwise, Shazam and Rightmove.
Manish Madhvani, Co-Founder and Managing Partner of GP Bullhound, comments: “The UK has raced ahead as the undisputed home of unicorns in Europe, with London producing the vast majority of Britain’s billion dollar tech companies. Growth is accelerating because we have created an environment capable of sustaining high levels of investment across a range of tech sectors.”
Cameron’s tech city initiative, launched in 2010, aimed to “bring together the creativity and energy of Shoreditch and the incredible possibilities of the Olympic Park to help make east London one of the world’s great technology centres”. He went further, saying that the idea was to “help to create the right framework, so it’s easier for new companies to start up, for venture capital firms to invest, for innovations to flourish, for businesses to grow.”
This project appears to have worked; London’s digital technology sector is growing faster than both the London and wider UK economy, and will continue to do so for the next decade according to research from London & Partners, the Mayor’s promotional company for London.
These achievements were celebrated at London’s Technology Week, which ran from the 15th – 21st June. More than 210 events took place, with workshops and talk hosted by Bloomberg, Goldman Sachs and Accenture, to name just a few.
FTSE 100 trades lower on Greece concerns
The FTSE 100 traded down 0.8% at lunchtime in London as the Greece debacle hit sentiment and weak mining stocks dragged the index lower.
“The market is coming under pressure, but there is still a chance they will reach a last minute agreement on Greece, as they have done in the past,” said Dafydd Davies, partner at Charles Hanover Investments.
European leaders are to resume talks on Saturday in a last minute effort to reach a deal and secure Greece’s futures in the Euro.
Arm Holdings (LON:ARM) was the biggest faller as it fell in tandem with Apple “Profit taking following yesterday’s nice move higher in concert with Apple is pulling Arm shares back towards the 1110p level this morning,” said Brenda Kelly of London Capital Group.
Tesco (LON:TSCO) was top of the pile following results that beat expectations. Although sales continued to slide, the drop was less than expected.
Woodford Equity Income Fund gives solid performance
Neil Woodford, top performing fund manager, set up the Woodford Equity Income Fund in June last year after leaving Invesco Perpetual. Those that were unsure whether to stick with the funds he used to manage at Invesco, or switch to his new fund needn’t have worried; Woodford Equity Income has performed well since it’s launch, with share prices rising 12% over the last 6 months.
Unusually, Woodford published a full list of the holdings in the fund – saying he was completely committed to transparency with his investors.
He is a big investor in tobacco stocks, such as British American Tobacco (up from £35 to £37) and Imperial Tobacco (up from £26 to £28.40). He backed Astrazeneca in its battle to fend off a bid from Pfizer, which paid off; shares in AstraZeneca are the biggest holding in the Woodford Equity Income, and have risen from £43.27 to £47.05 over the past six months.
The fund also has a notable amount of smaller companies, including Allied Minds, an American investment company that is listed in London with a market value of £400m. Oxford Catalysts Group, which is listed on the junior Aim market with a value of about £265m, accounts for 0.55 percent of Woodford Equity Income.
Mr Woodford said: “I strongly believe that investing in early-stage businesses can add meaningfully to the long-term performance of the fund, albeit individual positions will be small in the context of the overall portfolio.”
Geographically, the companies are mainly European – UK, Ire, Switzerland and Norway make up the majority. The rest of the shares are US-based.
The fund’s investment objective is income 10% higher than the FTSE, and his solid performance is down to his approach to handling money. Woodford buys big stakes in certain sectors; for example, a large percentage of the fund is healthcare – 32.5% compared to 8% benchmark, whilst ignoring others – including a notable lack of oil and gas – 0 instead of benchmark 11%. Most funds use a make up similar to FTSE index tin order to spread risk better.
“Woodford shunned tech stocks and banks, shortly before the crisis. He has also been investing heavily in pharmaceuticals for a number of years, which has boosted returns.” said Laith Khalaf, senior analyst at brokers Hargreaves Lansdown.
Crowdfunding added to the Oxford English Dictionary
Crowdfunding has officially entered the English language, after being added to the Oxford English Dictionary in its quarterly update.
The dictionary makes regular editions to its publications to reflect the evolving nature of the English language. Given the growth in technology and social media over the last few years, it is unsurprising to see that many of the new additions are related to these sectors. New words, senses, and phrases are added to OxfordDictionaries.com once editors have gathered enough independent evidence from a range of sources to be confident that they have widespread currency in English.
The Oxford dictionary defines crowdfunding as: “The practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the Internet”
Alongside crowdfunding, vaping, e-cig and retweet are among the words that have been added to the Dictionary today.
Uber ban provokes riots in France
France’s interior minister Bernard Cazeneuve has ordered a ban on Uber’s French arm, UberPOP, after a day of protests by taxi drivers.
French taxi drivers argue that they are being unfairly undercut by Uber. Cab driver in France must pay thousands of pounds a year in licence fees, and say that they have lost between 30% and 40% of their income over two years because of the growth of UberPOP.
“Many taxis drivers are infuriated,” Abdelkader Morghad, a representative of the FTI taxi union, told Bloomberg today.
UberPOP has been illegal in France since January, however the law has proved difficult to enforce. Uber say they will keep running the service until a judgment is handed down from France’s highest court.
Uber spokesman Thomas Meister said the firm had contested the law under which UberPOP has been ruled illegal, and accused the interior minister of overriding the normal legal process.