Welcome back to another fully-stocked week of trading. You’re kicking things off in the perfect place, with our trading preview. Today, we’re taking a look at the UK economy. Following that, we’ll dish up all of the events you need to look out for this week. Cup of tea at the ready? Let’s do this.
The Top 3 UK Companies
One way of broadly assessing the health of a nation is by checking the progress of its largest companies. So, let’s check the UK’s top 3 companies by market cap.
High: 4,892 GBX
Low: 4,018 GBX
Close: 4,866 GBX
6 mo % Change: +89%
Ulvr stock price, 6 months
Massive wins for Unilever, the multinational consumer goods company (Dove, Persil and PG tips etc). There’s a big vote coming up soon re. moving the company HQ to London (which will come with a £11 billion parting gift from the Netherlands). Keep an eye on that.
High: 9,320 GBX
Low: 7,970 GBX
Close: 8,217 GBX
6 mo % Change: +1%
AZN stock price, 6 months
Posting just a 1% increase in stock price over the last 6 months, things aren’t quite as rosy for AstraZeneca right now. The company that’s working on developing the leading COVID-19 vaccine had a bit of a wobble in early October when a U.K. patient reportedly suffered a “serious adverse reaction” to a sample. Pharma companies are facing a lot of competition for investor cash these days and the big money seems to be unsure on AZN.
#3 Royal Dutch Shell
High: 17.28 EUR
Low: 10.35 EUR
Close: 10.90 EUR
6 mo % Change: -31%
RDSA stock price, 6 months
Not a pretty chart for Shell investors. That line is steadily disappearing. This is indicative of the oil industry as a whole, but things are particularly wobbly at Shell, who recently posted its lowest stock price in 25 years.
Lockdowns, travel bans and lack of demand for oil is one thing, but it’s also going through a pretty messy reorganisation process right now. The plan is to become a cleaner, greener company with much fewer assets in oil by the middle of the century. Some investors love that, others have scattered far and wide. Which are you?
A No-Deal Brexit Looms Large
Things aren’t looking so great for an amicable split from the Bloc. On Saturday, №10 declared talks between the UK and EU regarding a trade agreement are “over”. Sources went on to state that there was “no point” in discussions continuing this week.
The UK’s chief negotiator, Lord Frost added that he’d told his EU counterpart Michel Barnier that there was now no “basis” for planned talks, due today.
…Wow, how awkward is that Zoom call going to be?!
With the UK seemingly throwing in the towel, what does this potentially mean? Well, according to a CNN Business analysis based on forecasts from Citi and the Institute for Fiscal Studies, a no-deal Brexit could cost the UK economy £20 billion.
This is especially bad news when you consider that the UK will also be struggling to steer the economy back on track in the wake of the global pandemic (all those lockdowns, bailouts, furloughs and tiers don’t come cheap).
However, the grass won’t exactly be greener for the EU, either. The Bloc relies on the UK as a key trading pillar and would certainly prefer the GB to remain a close trading partner, not least when it comes to fish!
Walking away is a risky strategy for Boris to go for. Definitely keep an eye on the EU this week, the ball’s in their court.
The UK’s Bad Credit Mood
Talk about being kicked when you’re down. Last Friday, the UK’s credit rating was downgraded by Moody’s as analysts at the agency warned of ‘meaningfully weaker’ growth predictions following the coronavirus pandemic.
The rating agency cut its grade one notch to Aa3. It did, however, state that the outlook was “stable”. Cheers for that.
We obviously won’t know the true cost of the pandemic until it’s over, however, the UK economy’s reliance on services does set it up to bear a heavier burden than other large developed nations.
Sorry that it’s not more positive this week!
This week’s market events
A quiet one, this week. Here’s where you need to be…
Monday 19th October
● China will kick things off with an update on their Growth Figures (CNY)
Tuesday 20th October
No major events scheduled
Wednesday 21st October
● The UK will give us a glimpse at its YoY Inflation Rate (GBP)
● Before copy-cat Canada does exactly the same (CAD)
Thursday 22nd October
No major events scheduled
Friday 23rd October
● The Kiwis will update us on their YoY Inflation Rate figures (NZD)
● Ahead of the Bank of Japan following suit and showing us their YoY Inflation Rate numbers (JPY)
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
The Contentworks team