Market Report 14th September 2020
In the news this week, Japan’s new prime minister, Sheltland Islands seek devolution from Scotland; Copper at all time high, British Economy rebounds by 6.6%
It has been a fascinating and busy week with major implications in the Markets so plenty to roundup this week.
Japan’s Prime Minister Abe, resigned a few weeks ago due to ill health. The elections have taken place in Japan and his successor is soon to be Prime Minister Suga. It is widely thought that he will continue the reforms and maintain the policies of Abe who has been very popular with both the Japanese citizens and global markets. Warren Buffetts US$6 billion investment into the Japanese Market offers support for the policies being implements and the future of the Japanese Market.
Good news for UK’s Brexit, is the trade agreement made with Japan which will be worth around £15 billion to both economies.
The UK economy bounced back with a 6.6% growth but how long that will remain is dubious as it was boosted by incentives from the government to spend and people coming out of lockdown.
The Shetland Islands approved a motion to seek independence from Scotland. The Shetlands are seeking to remain within the UK umbrella but under the same governance rules as apply to The Isle of Man, Guernsey and Jersey. Orkney Islands have stated they are looking at a similar proposal as the don’t want to be part of an Independent Scotland. This would have major implications for Scotland who would be reliant on the oil both Isles generate to balance the financial books.
China and the EU are holding talks for a possible trade agreement however, there are a few stumbling blocks particularly regarding access to both countries. China would have access to most businesses within the EU block however, there would only be limited access for EU companies to the Chinese Markets.
Bank mergers are also in the news with Swiss banks UBS and Credit Suisse exploring a possible merger to become one of the Europe’s largest banks. In Spain Caixa Banks SA and Bankia SA are also in possible merger discussions to become the largest bank in Spain.
The Share Markets are in a temporary holding pattern waiting for the Central Bank monetary policy meetings taking place this week. Meetings being held are on Wednesday the US Fed and Central Bank of Brazil; Thursday see meetings for Bank of Japan; Bank of England; South African Reserve Bank; Bank Indonesia and CBC Taiwan then on Friday Central Bank of Russia. The European Central Bank held its meetings last week and decided to keep interest rates on hold and the quantitative easing program unchanged.
Gold – the price of gold moved upwards slightly with a 0.89% growth for the week with gold now at US$1946.26
Silver – the price of silver moved upwards very slightly with 0.06% growth for the week. Silver now sits at US$26.86
Gold:Silver ratio – remains in the low 70’s at 72.40 indicating there is still good growth potential if buying silver.
Copper – continues its bull run mainly on supply fears with the world’s largest mines in South America being affected by lockdowns. China’s quick recovery and demand for copper has helped fuel the spike in prices. According to Metal Bulletin, some 1.15 million tons of production was lost to the pandemic this year with a further 672,000 tones lost due to other disruptions.
Oil – Prices continue their downward trend with WTI Crude down to 36.97 a barrel and Brent Crude down to 39.50 a barrel this is due to an increase in inventories with the American Petroleum Institue reporting an increase in inventory to 2.970 million barrels higher than analysts had predicted.
Alternative Energy – we are used to seeing many so-called alternative sources which turn out to be hair brained schemes however one idea which keeps coming back and gaining more popularity is making windows in homes solar windows. Scientists now view the windows as a chance to take passive parts of a building and transform them into active power generators with engineers having now developed semi-transparent solar cell panes.