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Week in review: the FANGs bite back
Until recently, the technology sector has seemed to have a degree of immunity to anaemic sentiment about global growth, but this week, the so-called flying FANGs were left looking toothless for a bit. Fears about the corporate profits and continuing global trade tensions drew blood on Wednesday, as shares in Facebook, Amazon, Netflix and Google-owner Alphabet fell. Media-streamer Netflix was cut the deepest, falling 9.4% over the day.
On Thursday, however, Twitter swooped in to save the day, resurrecting tech investors’ hopes with a strong earnings report. The FANGs and their ilk responded well, causing the tech-heavy NASDAQ Index to climb 3.0% on the day. It was still down 1.8% on the week to Thursday’s close, however.
Eroding equities
The malaise crept over wider US equity markets and the S&P 500 Index dropped 2.3% over the week. The now largely-symbolic Dow Jones Industrial Average is on track for its worst month since May 2010.
Asian and European stocks were also affected: Japan’s Topix had a howler, falling 5.4%, while the FTSE World Europe (ex UK) declined 1.9%. UK large-cap stocks held up a little better, the FTSE 100 was down just 0.7%.
The global sell-off also resulted in Brent crude oil dipping below $76, with fear and anxiety about the global economy proving to play a bigger role in the oil price than the fundamentals of supply and demand.
Sterling struggles
The pound fell to a three-week low on Wednesday as Brexit talks appeared once more to hit an impasse. This time around, the European Union’s border backstop – which would see Northern Ireland remain within the customs union and large parts of the single market – was the main point of contention, and sterling slumped to $1.29. On the bright side, the weaker pound helped to curb the FTSE 100’s losses; many of the index’s constituents derive a big part of their earnings from overseas.
A fine for Facebook
The UK’s data protection watchdog slapped a £500,000 fine on the tech company for its role in the Cambridge Analytica data scandal. Well, more like a tickle than a slap – given that Facebook earned $13.2 billion in the second quarter of the year. The reputational damage might be more difficult to take. The Information Commissioner’s Office accused Facebook of letting a “serious breach” of the law take place by giving app developers access to people’s personal data “without clear consent”.
Magic Money Tree
Ahead of the Budget next week, Chancellor Phillip Hammond appears to have found £13 billion down the back of the settee. Or something like that. The Office for Budget Responsibility (OBR) said it had underestimated the state of public finances. Happily for Hammond, stronger-than-anticipated personal tax receipts and corporation tax revenues are set to reduce the budget deficit for the 2018-19 financial year and cut borrowing forecasts until 2022. This serendipitous turn of events will give Mr Hammond more scope to fund government spending pledges, such as Mrs May’s promise of an extra £20 billion a year for the NHS England by 2023.
And finally
With Halloween just around the corner, many of us will be contemplating costume choices for trick-or-treating or fancy-dress parties. Even pets are getting in on the act, with many families also choosing to dress up their furry little Fidos and Felixes for the occasion. This week, America’s chicken fanciers breathed a sigh of relief , having previously thought their clucking chums would be unable to join in the fright-night fun. The Center for Disease Control (CDC) moved to clarify a statement it had made about handling hens carefully, which initially made many chicken owners think that Halloween costumes were a no-no for their feathered friends. A spokesman for the CDC sought to al-lay their fears, saying : “it hasn’t given this advice”. Instead, it confirmed the organisation only wants small-scale keepers to use sensible measures to avoid spreading disease. So if you want to dress your bantam as Batman this Halloween, it’s good to know you won’t be accused of fowl play.
