Market Report 27th July 2020
A round up of things in the markets that have caught my eye during the past week.
Debenhams are looking for a buyer for the business. London Investment Bank, Lazard, have been called in to kickstart the process.
IAG are considering a shares issue to raise £2.7 billion. The are the parent company of British Airways and Iberia Airways both have been particularly hit hard with lockdown. The lockdowns and no go travel areas continue to hit the travel industry very hard.
British Government announced more investment opportunities with better interest rates through NS&I income guaranteed bonds. NS&I is the governments arm for raising domestic cash to go towards government coffers. Traditionally, they would look to raise around £6 billion however this time they are looking to raise £40 billion hence the favourable rates.
The EU are again pushing for currencies to go back on the gold standard. There is definitely some interest and could be one of the reasons reserve banks have been stock piling gold, but whether or not it is feasible remains to be seen. My blog on 30th July will explain more about the gold standard.
Gold – money has been pouring out of the share market and into gold. Gold was up to $1902.57 an increase of 5.02% for the week.
Silver – which was lagging behind gold has become more favourable over the past few weeks with some accelerated growth. Silver is up 50.52% over a month. This week it went up 17.69%
Gold:Silver Ratio – as silver continues to outperform gold the ratio continues to drop. This week it stands at 83.48. So, silver still remains a good investment opportunity but now is the time to start thinking about the percentages of silver to sell as the market nears 50 percent which is very likely in the next few weeks.
Oil – is holding around $40 a barrel. However, there is strong suggestions that the prices are being manipulated by the rising tensions between the US and China.
Mexico placed an oil hedge in March known as the Hacienda on Wall Street. It was one of the biggest and most secretive hedges in history. When oil prices dropped the success of the hedge generated so much income it is thought to have saved Mexico’s economy from ruin. Russia is currently looking at a similar hedge buy staying coy about it.
Alternative Energy – China is in the market to bolster it’s holdings in hydro power and is eyeing up international companies. The Chinese prefer smaller projects in the range of 1-2 GW.
Pumped storages are increasingly gaining popularity as the instalment of wind and solar projects keeps growing. The intermittent nature of renewables strengthens the need for pumped storage.
Both the US share markets and the UK markets closed down on Friday over fears of the US and China tensions, increase in second wave - coronavirus impact on the markets with 40 countries now facing increases of infections and the infection rate. Hong Kong is on a third wave.
As we head into more turbulent economic times the markets become more interactive and volatile offering many investment opportunities.