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Week in Review: A slippery slope emerges
The recent sell-off in emerging market (EM) equities has reverberated around the globe. South Africa, Russia, Mexico, China and Indonesia have all suffered, and the broader MSCI Emerging Markets Index has fallen by almost a fifth since its 2018 high point back in January.
EM currencies have also been affected. While Argentina and Turkey have garnered the headlines as the value of their currencies has slumped over the past few weeks, the anxieties are spreading to countries with current account deficits such as South Africa and India. The South African rand slid more than 3% on Tuesday after official figures revealed that the country entered a recession in the second quarter. Meanwhile, the Indian rupee hit an all-time low against the US dollar at close of business on Wednesday. There were incipient signs of stabilisation towards the end of the week though, with the Turkish lira and Argentine peso staging a measure of recovery on Thursday.
Continued nerves about global trade surrounding US tariffs and emerging markets turbulence combined to sour sentiment in the more developed economies. European shares were down, with the FTSE World Europe (ex UK) Index dropping 2.4% for the week to Thursday’s close. Wall Street, too, was slightly lower with the S&P 500 0.8% down on a combination of emerging market concerns and a slide in technology stocks. The tech-based Nasdaq index fell 2.3%. The FTSE 100 was 1.5% down.
King condemns the Chequers castle, but sterling conquers
The Brexit barricades took another bombardment, as a former Bank of England governor joined the offensive. Mervyn King derided UK Prime Minister Theresa May’s Brexit plans, stating it “beggared belief” that the sixth largest economy in the world would resort to stockpiling medicines and food. This, he said, illustrated “a whole lack of preparation” for a no-deal Brexit.
Currency traders did not appear to share Lord King’s gloomy prognosis though. Sterling moved sharply higher on Wednesday following reports that the UK and Germany had made progress on Brexit discussions. News agency Bloomberg reported that Germany was prepared to accept a less detailed agreement on the UK’s future economic and trade ties with the EU in order to get a deal done. The news left sterling 1% higher on the day against the US dollar, and 0.6% up against the euro. However, the sterling recovery caused the FTSE 100 to slip to its lowest level since April. Many index constituents derive the bulk of their revenues from overseas, and big US dollar earners such as Burberry and WPP felt the pressure.
Amazing Amazon joins the trillionaire’s club
Amazon this week became the world’s second $1 trillion company by market capitalisation, having been pipped to the post by iPhone-maker Apple last month. After an extraordinary surge which has seen the price of its shares more than double in 12 months, Amazon has found its way into the trillionaire club from its humble beginnings back in 1994 as an online bookseller.
Not all that meats the eye
Summer BBQs might leave a sour taste in the mouth as a newly-published report revealed the troubling extent of hybrid hotdogs and blended Bolognese in the UK. More than a fifth of meat samples in 2017 across supermarkets, restaurants and food plants in the UK were found to be contaminated with other animals’ DNA, with a stomach-churning 145 out of 665 being partly or wholly made up of “unspecified meat”. The foodstuffs most prone to adulteration were lamb, mincemeat, sausages and kebabs. These statistics are redolent of the horsemeat scandal of 2013, and while the 2017 samples were clear of horse meat, one sample, purporting to be ostrich meat, was found solely to contain beef. All told, the revelations have certainly ruffled a few feathers…
And finally…
Edinburgh excavators treading caerphilly on archaeological sites have uncovered a brielliant discovery. Ancient pottery pieces extracted from the ground are taking us backwards to when edam was made with cheese residue being found on the remains of drinking horns and sieves as far back as 5200BC. No wonder it’s mouldy.
