Market Report 7th September 2020
Catching my eye in the Financial Markets this week – Banks restrict mortgage lending; Warren Buffett spends US$6 Billion on the Japanese Share Market; UK Publicly Listed Companies start reducing dividends; Bitcoin is environmentally unfriendly and more….
The property market in the UK has seen an unprecedented boom when the Chancellor reduced Stamp Duty making it an ideal time to purchase property. Two key lenders Nationwide and Barclays announced they were reducing the loan to salary ratio downwards and “bank of Mum & Dad” deposits would no longer be accepted meaning anyone buying a property will have to ensure they have much larger deposits saved. This change applies to existing applications as well as new applications (for more information about the investment training courses we run email firstname.lastname@example.org)
Some FTSE100 Companies and some AIM listed companies have started to reduce dividend payouts in an attempt to improve cashflow within their businesses and help build a cash pool to deal with the fallout of the recession. It is worth checking the investments you have and ensure you are still getting the dividends you require for your investment strategies.
Warren Buffett has invested US6 Billion in the Japanese Share Market. As a value investor meaning he looks for undervalued investments, the move is likely to see a boost to the Japanese Share Market. It will also be interesting to watch the currency markets for the Japanese Yen. The Yen has been considered a safe haven currency but with Buffett’s Investments likely to bring more investing into the country the currency market could become more volatile.
NS&I have admitted that people who bought into Premium Bonds are having to wait up to 5 months in some instances, to cash in their bonds and get their money back. For clarity, I do not advocate investing in Premium Bonds but rather using the NS&I platform to invest in Income Bonds and Capital Growth Bonds which are backed by the government up to £1 million and are guaranteed. Funds, form both the Income Bond and Capital Grow Bonds are usually available within 7 days of cashing in.
Gold – The price of gold continued it the downward movement reaching US$1933 as it continues to rebalance due to the speculation in July/August. Overall is was down 1.75% for the week. However for the year the gain is 26.5% which compares favourably to the S&P500 which is up 6.3% year to date.
Silver – is also rebalancing with a downward price of US$26.88 a drop of 3.68%. However, year to date the growth for silver is 48.05%.
Gold:Silver Ratio – again rose to 72.14 indicating how undervalued the silver currency is.
Reports of a shortage of silver by Global Mints led to an increase in price when infact, the shortage was not in silver stock but rather in lack of blanks available to the mints for processing. The shortage of blanks remains as many bullion suppliers are “awaiting stock” of coins and bars for retail.
CrytoCurrencies – are in the news due to them being environmentally unfriendly. A report based solely on Bitcoin, as no data was available on other cryptocurrencies, states the electricity required for mining bitcon and providing extra security is around 0.04% of all generated electricity. To put that into perspective the electricity would run Switzerland’s power grid for 2 years.
Oil – Also continues a downward trend with WTI crude down from US$43 a barrel to US$39. Natural Gas which had been in an upward market reversed the trend and was down to US$2.53
Alternative Energy – nano-diamond battery development. Commercial diamonds have a 15% charge collection efficiency. The nano-diamond battery was able to achieve 40% charge. NDB startup company who are pioneering the nano-diamond battery state the new technology will allow a battery life for cell phones, aircraft, rockets, electric vehicles, sensor and other devices and machinery of approximately 28,000 years almost eliminating traditional battery recycling and waste.