The infoshot to help kick-start your week
Last Week
- Global stock markets are experiencing a sharp selloff, driven by fears that the Federal Reserve’s support for a slowing US economy is insufficient, pushing investors towards bonds. Cryptocurrencies also took a hit, with Ether seeing its worst drop since 2021. Japan’s Topix and Nikkei indexes are expected to fall about 20% from record highs, facing their worst three-day decline since the 2011 Fukushima nuclear meltdown. The yen surged amid expectations that the Bank of Japan will continue raising interest rates. Meanwhile, bond traders are betting on a rapid economic deterioration in the US, anticipating that the Federal Reserve will slash interest rates to prevent a recession. Goldman Sachs has raised the probability of a US recession within the next year to 25% from 15%, despite the rise in unemployment. Concerns over a potential hard landing have triggered one of the largest bond rallies since March 2023.
- Asian technology stocks added to the market’s grim outlook, with Korea’s Kospi and Taiwan’s Taiex experiencing sharp declines. This slump follows Friday’s dramatic shift from US Big Tech, which pushed the Nasdaq 100 Index into correction territory, erasing over $2 trillion in value in just three weeks. Nasdaq 100 futures continued their decline this morning, falling by as much as 3%. Contributing to the downturn was news that Berkshire Hathaway is significantly reducing its Apple stake. The Warren Buffett-led conglomerate revealed on Saturday that it sold almost half of its Apple shares during the second quarter, lowering its stake from about $140 billion in March to roughly $84 billion.
- Geopolitical concerns further dampened market sentiment, as Israel braced for potential attacks from Iran and regional militias in retaliation for assassinations of Hezbollah and Hamas officials. The US responded by sending defensive reinforcements and pressing for a Gaza cease-fire. Oil prices fluctuated near a seven-month low, with US Secretary of State Antony Blinken warning G-7 counterparts of a possible attack on Israel by Iran and Hezbollah as early as Monday, according to Axios. Israeli shares fell sharply in Sunday trading amid these heightened tensions.
- The prospect of higher taxes on the wealthy in the UK and France is prompting some to consider moving abroad. In the UK, Prime Minister Keir Starmer’s Labour government plans to eliminate preferential tax treatment for rich foreign residents, known as non-doms, including on assets held in overseas trusts. Meanwhile, in France, opposition to President Emmanuel Macron is threatening to overturn years of pro-business taxation. According to a report by Henley & Partners, the United Arab Emirates is expected to attract the most global millionaires this year, followed by the US and Singapore. Italy, Australia, and Greece are also popular destinations for the wealthy seeking new residences through investment.
Market Pulse
Coming Up
- UK Average Earnings Index, Tuesday 13th August 2024 at 7:00am
- UK CPI Data, Wednesday 14th August 2024 at 7:00am.
- US CPI Data, Wednesday 14th August 2024 at 1:30pm.
- UK GDP Data, Thursday 15th August 2024 at 7:00am.
Notice:
For professional advisers only, Copia does not provide financial advice, and the contents of this document should not be taken as such. The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated, but is not an indicator of potential maximum loss for other periods or in the future.Open document settingsOpen publish panel
