The Republican party has successfully secured a majority in the US Senate, the US House and saw their candidate Donald Trump being voted in as President Elect in the 2016 US Election. While European Stock markets fell in pre-trading hours, as Trumps likely victory slowly became clear, the new President Elect’s speech this morning installed new confidence, leading to an easing of the initial upset.
Donald Trump wins US Election
Donald Trump has officially secured a majority of votes in the 2016 US Presidential Election. Having won the swing state Florida, as well as the usual Democrats strong-hold Pennsylvania, Trump went ahead of Clinton in the early morning hours and became the next US President Elect with a total of 58,844,024 votes.
The Republican Party also celebrated a victory in the US Senate as well as the US House, securing a majority of seats in both top US political institutions.
European Stock Market upset remains minor
European Stock Markets dropped initially during the early morning hours. FTSE100 futures fell as much as 4.5% in pre-market trading.
However, Trump’s rather modest and ‘reasonable’ victory speech proved reassuring to investors. European Stock markets recovered a great part of their losses in the first hour after market open and have since only fallen modestly.
The FTSE 100 is currently loosing 0.7% on the day.
The CAC 40 index is down 1.68%.
Germany’s DAX has lost 1.56% since market open.
Gold is the real winner
Gold and other precious metals rallied in the early morning hours as investors fled to save haven assets. Since then gold and silver prices have retracted only modestly.
The gold price currently stands at US$ 1,302.50 per ounce, up 2.2%.
Market volatility remains short lived
While the early morning hours saw some upset in the stock and commodity markets, first evidence shows that market volatility due to Trump’s victory may only be short lived.
His next moves, coming speeches and developments will still be watched closely.
Luxury car manufacturer Jaguar Land Rover saw sales rise 11 percent in October, 11 percent higher than the same period of the previous year.
The group sold a total of 46,325 vehicles last month, noting a 39 percent sales growth in China, 25 percent in Europe and a smaller eight percent individually in both the United Kingdom and Northern America. Despite strong sales in these markets, revenue in other overseas markets fell by 22 percent.
The promising revenue performance was particularly evident in sales of popular models such as the Land Rover Discovery Sport, Range Rover Evoque, Jaguar XF, which also coincided with the introduction of the Jaguar F-PACE onto the market.
Despite the strong figures, Jaguar announced it was withdrawing its interest from the purchasing or leasing deal of the Silverstone racing track. A spokesperson commented on the development:
“Jaguar Land Rover has ended discussions with the British Racing Drivers’ Club for the foreseeable future and is not proceeding with any plans to either lease or purchase Silverstone at this time”.
The negotiation talks had been underway since April of this year, with JLR envisaging the tracks becoming “a heritage site” to display the manufacturers premium luxury vehicles. It was initially thought that JLR were potentially securing a deal worth £33 million with the British motor racing institution, in return for a 249-year lease on the track.
Silverstone is owned by the British Racing Drivers Club (BRDC), a group consisting of 850 shareholders. In the five years to 2015, BRDC made reported losses of £55.9 million.
Circuit owner British Racing Drivers’ Club (BRDC) declined to comment on the latest development which will no doubt prove a concern for the struggling group.
Conversely, shares in the owner of JLR Tata Motors Limited (NYSE:TTM) were up 2.56 percent as of Monday morning.
Around 20,000 Tesco Bank accounts suffered “significant” fraudulent activity over the weekend, the bank’s CEO said on Monday.
Tesco Bank are temporarily stopping online transactions after 40,000 accounts experienced suspicious transactions in the early hours of Sunday morning. Around 20,000 of those had money removed from their bank.
However, CEO Benny Higgins moved to calm customer fears on Monday morning, saying that “any financial loss that results from this fraudulent activity will be borne by the bank”, adding that “customers are not at financial risk”.
UK house prices up in October
House prices increased dramatically in October, going against the market’s general downward movement and surprising analysts.
The figures, from mortgage lender Halifax, showed a 1.4 percent rise in October. This comes after a 0.3 percent rise in September. Analysts had expected a rise of around 0.2 percent.
Ryanair confident after strong figures
Ryanair reported a 7 percent increase in first-half profits on Monday, describing it as a “strong first half”.
The budget airline disclosed a €1.168 billion profit between April and September and raised its long-term traffic forecast by 10 percent.
Ryanair remained confident it could deliver good figures in the second half of the year, “despite the uncertainty of Brexit”. In an interview with the BBC, CEO Michael O’Leary said business was “booming”, but that the environment was “bearish” after the Brexit vote.
Last month, Ryanair reduced full-year profits guidance to between €1.3 billion and €1.35 billion, 5 percent lower than originally expected.
Yesterday saw two major announcements: the government lost its case in the High Court and is now unable to trigger Article 50 without parliamentary approval, and the Bank of England will be keeping interest rates on hold at their record low of 0.25 percent.
The High Court’s decision was met with mixed reactions – some saw it as a victory for parliamentary supremacy, with others seeing it as an unnecessary obstacle in the way of negotiating a Brexit – but both agreed it was historic. In the wake of that, the Bank of England’s monetary policy announcement seemed a little undramatic – but it still has important ramifications.
According to Phil Foster, Managing Director of Love Energy Savings, the High Court decision will mean more uncertainty for the financial markets.
Phil Foster, Managing Director of Love Energy Savings
“The High Court ruling today will not have done much to remedy this uncertainty, throwing into question the ability of Theresa May to invoke Article 50 in March 2017 as previously speculated.
“Despite the pound’s value experiencing an uplift, this is not indicative of an improvement in investor confidence long term. We can rest assured that the next few months will be ones of uncertainty, not just economically but also politically, as the democratic will of the people is challenged by, well… democracy.”
The Bank of England highlighted growing inflation in the UK, usually a sign of a healthy economy. However, according to Foster, it may not be good news for businesses:
“The issue that may now face businesses, as it continues to rise, is the impact it will have on real wages. As prices rise, employees will be calling for wage increases to match the rate of inflation, with some businesses already struggling to make ends meet in the current economic climate, this additional cost could be the final nail in their coffin.
“It is a delicate balancing act between ensuring that price levels support growth, and compensate for the depreciation of sterling, without placing additional pressure on those who are already feeling the strain.”
With drawn-out Brexit negotiations and the threat of higher prices, it may be a difficult environment for small and medium-sized businesses.
“In the meantime, it is vital that SMEs save money where possible, to shield themselves from higher prices and the demands for wage increases. It has therefore never been more important for businesses to micro-manage their finances,” Foster added.
Sterling rose and the FTSE 100 fell after the UK government lost a landmark case in the High Court on Thursday.
Judges in the High Court ruled that Prime Minister Theresa May could not trigger Article 50 without approval from parliament. Consequently, sterling gained significantly against other currencies, hitting a four week high later in the day as the Bank of England announced that interest rates would remain at 0.25 percent.
The FTSE 100 fell on the news, currently down 0.8 percent on the day. Mid caps rose however, outstripping the FTSE 100 by the greatest margin since April 2009. The FTSE’s international exposure tends to mean that as sterling strengthens, shares fall. Mid caps focus largely on the UK, meaning they benefitted from a stronger pound.
Kathleen Brooks, Head of Research at City Index, said in a note:
“This decision has increased the uncertainty around the UK’s decision to leave the EU… The FTSE 100 is lower, but this is largely a result of global equity weakness and the FTSE’s inverse correlation with the pound.”
Troubled supermarket Morrisons revealed its fourth consecutive quarter of growth on Thursday, sending shares up over 2 percent.
Like-for-like sales rose 1.6 percent in the three months to 30th October. Total sales group sales excluding fuel are still down 1.2 percent on the year, with restructuring – including supermarket closures and the exit of M local – continuing to have an effect.
Halloween turnover was the group’s “biggest ever”, up 20 percent on last year and the supermarket moves its focus to holiday merchandise. The third quarter also saw Morrisons take home several awards, including In-store Bakery Retailer of the Year at the Baking Industry Awards and National Café Chain of the Year at the Café Quality Food Awards.
The positive figures are further evidence that the turnaround plan of chief executive David Potts’, who took over the company last year following the removal of former boss Dalton Philips, may be making progress. Potts commented:
“This year’s Halloween was our biggest ever, with our great value offer proving popular with customers. Our financial position is strong, and we are committed to further strengthening our balance sheet and lowering debt. Our net debt target remains c.£1.2 billion by year end.
“Our like-for-like sales have now been positive for a year, which is thanks to the hard work and dedication of the whole Morrisons team. There is a lot more we plan to do. We will keep investing in becoming more competitive and improving the shopping trip, and I am confident we will serve our customers even better during the important trading period ahead.”
Morrisons (LON:MRW) shares have steadily risen on the London market this morning, currently trading up 2.53 percent at 226.90 (1014GMT).
Struggling supermarket Morrisons revealed its fourth quarter of rising sales on Thursday, helped by strong demand for Halloween merchandise.
Sales rose 1.6 percent in the three months to 30th October, with prices down 1 percent. However, total group sales fell 1.2 percent to reflect the continuing impact of supermarket closures and the exit of M local.
Morrisons have made more effort to focus on key seasons in recent months, and were boosted by a 20 percent rise in sales of Halloween goods.
The latest results are further evidence that the supermarket chain’s turnaround plan may be beginning to have an effect. Morrisons’ (LON:MRW) shares are currently trading up 1.40 percent at 224.20 (0943GMT).
Petrol prices at highest level in over a year
The price of petrol and diesel shot up in October, taking it to its highest level since July 2015 as rising oil prices and a weaker pound come into effect.
This marks the highest monthly jump in three and a half years, with average petrol prices rising 4.4p to 116.7p per litre and average diesel prices up by 5.2p to 118.7p per litre.
However, the RAC have said prices may settle in the next few months. Fuel spokesman Simon Williams said:
“Opec, which represents some of the world’s biggest oil producers, recently agreed in principle a cut in production.
“But a final deal is still to be agreed at an Opec meeting at the end of this month and, with some analysts suggesting a deal might yet stall, this leaves open the prospect oil prices might stabilise or even fall before the end of the year.”
Service sector strong despite growing inflation
The UK service sector expanded in September, rising to its highest level since January, despite growing inflationary pressures.
The Markit/CIPS UK Services Purchasing Managers Index (PMI) figure rose to 54.5 in September, up from 52.6 the month before and well above the 52.4 expected by analysts.
However, it also showed a sharp jump in inflationary pressures faced by companies, which grew at its fastest rate since the survey started in 1996. Chris Williamson, chief economist at survey compiler IHS Markit, said it “marred” the “encouraging picture of the economy” in October.
Logistics, residential and retirement sectors are set to be represent the largest European real estate investment opportunities across the next 12 months, according to research by BrickVest.
According to newly released research, BrickVest of those property-focused investors polled, 44 percent consider Logistics to be the largest European real estate investment opportunity across the next year, similarly 37 percent considered retirement as profitable and 33 percent for residential.
Emmanuel Lumineau, BrickVestCEOstated: “The research shows that the logistics sector remains front of mind for institutional investors, but also that non-traditional sectors like retirement homes are catching up. Speed of the investment process and access to liquidity have put off investors in the past – BrickVest is different to other real estate investment offerings in that we put liquidity at the core of what we do.”
“In a background of Brexit, income is considered a priority and we prefer investments that will provide strong diversification and increased stability throughout their hold period. We have seen plenty of appetite from investors and it is clear that many of our users want to take advantage of the Brexit vote with the confidence that they have a secondary marketplace to trade.”
In addition, the research also examined the factors that proved deterrents for investors looking into commercial real estate previously. According to their findings, two in five emphasized that the process to do so was not efficient enough. Morever a third of participants cited the lack of liquidity of the market as a result of the absence of an “efficient secondary market”.
In regards to European real-estate, a recent ranking by The Telegraph named Budapest in Hungary as the the best locations to invest. The broadsheet cited “good yields, relatively low transaction costs and pro landlord law” as key investment incentives. The remainder of the top five consisted of Skopje, Macedonia (2), Amsterdam, Netherlands (3), Istanbul, Turkey (4) and Zagreb, Croatia.BrickVest is an online investment platform that operates across Europe. The start-up was launched early in 2016 in February and has been featured by Bloomberg Business and The Financial Times among others.
Africa’s business environment has continued to excel in recent years and is predicted to have the largest workforce by 2035. Global Career Company started in 2002, originally focusing on the South African recruitment market. With the end of the apartheid, founders Rupert and Sarah Adcock spotted an opportunity to connect businesses seeking diversity with the diaspora of South African professionals wanting to return.
Its service now incorporates markets all over the world, with the current revenue being led by Africa (77%), and followed by MENA (11%) and Asia (10%). Since its inception, Global Careers Company has consistently achieved gross margins of 75%-85%, and an EBITDA of 15%. The range of recruitment services offered by Global Careers Company include Recruitment Summits, Search & Selection, Digital Recruitment Marketing, Recruitment Campaigns and Talent Insight. The company’s strategic focus is based on growing and maintaining a global talent pool, which allows them to recruit high calibre and high potential emerging market talent from around the world.
The funds raised on Crowd2Fund will be exclusively used for growing the African part of the business, specifically rolling out business activity in Lagos and Abidjan with the “Introducing Talent Agenda” series. This will be focussed on investment into digital assets, events and marketing activity.
Sara Adcock says, “We will invest in running events in multiple locations around Africa, adding to the existing portfolio by moving into markets we have not previously visited. We will also be investing in an enhanced sales and marketing programme, which will better showcase our portfolio and support commercial outreach.”
The African market is currently worth $50 billion, and the company chose to seek their growth funds on Crowd2Fund in order to allow their user base to participate in their future success.
“Crowdfunding makes sense for us because our user base is significant and engaged with what we do. We hope that our user base will support us to row, and we want them to be the beneficiaries of that growth.”
Global Career Company chose Crowd2Fund as their platform due to its ability to help them build an investor team and run a marketing campaign to generate awareness for the business, something the other platforms don’t offer.
UK inflation may “accelerate rapidly” in 2017, a leading think tank has warned.
The National Institute for Economic and Social Research forecast inflation rising to 4 percent by the end of 2017, nearly four times its current rate, due to the weakening of the pound. It also warned that the economy faces “significant risks” in the upcoming months.
In August, the NIESR forecast a rise to 3 percent next year. CPI inflation rose to 1 percent in September, according to the Office for National Statistics.
Standard Chartered results hit FTSE
Standard Chartered shares fell on Wednesday, despite increasing pre-tax profits by over $500 million.
The bank reported profits of $458m, compared with a $139m loss last year. However investors remained unimpressed by the figures, sending shares down nearly 4 percent in early trading.
Chief executive Bill Winters said “income and profit levels are not yet acceptable”, and warned that the bank may be facing legal action from Hong Kong’s financial regulator.
Standard Chartered (LON:STAN) shares are currently trading down 3.85 percent at 646.80 (0936GMT).
House price growth stagnates in October
British house prices stagnated in October for the first time in 15 months.
Mortgage lender Nationwide, who compiled the figures, said it was evident of a slowing housing market in the wake of Brexit.
House prices were flat last month, compared to a 0.3 percent rise in September and a 4.6 percent rise in October last year. Reuters economists had estimated a 0.2 percent price rise.
