On the heels of Election Day, capping one of the most contentious presidential election cycles in US history, markets have been roiled by the combination of an unclear victor – with millions of absentee ballots yet to be counted across several key states – and a premature claim by President Donald Trump that he had won the race.
European markets reversed their gains from Tuesday, when investors had been betting on a clean victory for Democratic presidential nominee Joe Biden. The FTSE 100 lost 1.1% as trading opened, with the CAC 40 and DAX falling 1.4% and 1.9% respectively. Yields on popular bonds also slipped as investors took refuge, with demand rising for US Treasuries and German Bunds.
Wall Street futures fell following Trump’s comments on Wednesday morning, but quickly recovered. The S&P 500 gained 0.5% while the Dow Jones lost 0.2%, and the tech-focused Nasdaq jumped by 2.5%.
“The polls are proving wrong again,” said Giles Coghlan, Chief Currency Analyst at HYCM, pointing to the near certainty of a contested election in accounting for markets’ new uneasiness. “As we are already seeing this morning, the Dow Jones and US Dollar will be in a volatile state until there is a clear outcome that both parties will accept.
“US stocks are selling off on the uncertainty, reversing the gains expected from a Biden victory as projected by the polls. This will also have significant ramifications on the performance of other major currencies and assets. So long as the uncertainty remains, I’m expecting investors to sell global equities, and their holdings in currencies like the Euro and US Dollar. At the same time, we should see inflows into the Japanese Yen.”
Giles also remarked that there are still reasons to be optimistic in the medium and long term. “Regardless of who is the next US President, the coming US stimulus bill should lift US stocks, once we have a winner confirmed,” he said. “Furthermore, over the medium term, even if gold sinks a little lower on a firmer US Dollar, the price of this safe haven asset should still rise in the coming months and into 2021. Low interest rates are projected to remain unchanged for the next three years by the Federal Reserve, and the large quantitative easing program will support the longer-term appeal of gold.”
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Nigel Green, founder and chief executive of deVere Group, urged investors to exercise caution as the results of the election are challenged in court. “This monumental uncertainty in the world’s biggest economy is going to send global stock markets into a tailspin as investors get rattled about a clear outcome taking longer to reach than they hoped,” he said.
The CEO added that renewables, industrials and cyclical stocks are likely to perform well under a Biden administration, while the oil and gas, financial and healthcare sectors will likely do better under Trump.
“History shows stocks tend to rise regardless of which party controls the White House, but it matters how your portfolio is balanced,” he said. “Therefore, investors should sit out the temporary volatility until the picture becomes clear.”
Giles Coghlan, Chief Currency Analyst at HYCM, takes a look at both candidates and the significance their victories might have for investors.
This week’s US presidential election will certainly be one for the ages. American voters will be heading to the polls today to elect Joe Biden as the 46th US President or continue with another four years of President Donald Trump. If you believe the polls, Joe Biden is edging ahead of Donald Trump. If 2016 taught us anything, however, the polls should be viewed with a grain of salt.
Investors and commentators have certainly learnt some important lessons, with many adopting a ‘wait and see’ approach. Those who hedged against a Trump victory in 2016 saw their portfolios take a big hit, though the equities rally in response to Trump’s corporate tax cuts likely helped such investors recuperate their losses over his premiership.
For now, it is important to consider what either a Trump or Biden victory could mean for the financial markets. Both candidates have touted some policies which will no doubt affect the performance of different assets. While everything is still up in the air, there are still significant observations to be made which I have detailed below.
President Joe Biden
First and foremost, I expect that investors will flock to green energy companies listed on the Dow Jones if the Democrats emerge victorious. Although not fully implementing the “Green New Deal” proposed by Democratic members of the House of Representatives, Biden has voiced his support of renewable energy and shown a willingness to gradually ween the US economy off its’ dependence on petroleum oil. At the very least, a Biden administration would be keen to re-join the Paris Climate Accords that Trump pulled the US out of in 2017.
Biden’s strong chances at securing the Presidency at present have already bolstered green energy stocks, with the First Trust Nasdaq Clean Edge Green Energy Index Fund currently trading at an all-time high. Upon a Biden victory, there could be an immediate surge in stocks related to renewable energy; including companies involved in solar, wind, and battery storage.
First and foremost, I expect that investors will flock to green energy companies listed on the Dow Jones if the Democrats emerge victorious.
Tump Back in the House
Although The Economist currently places the chances of a Trump re-election at only 5%, it’s still worth considering how the markets would react to such an eventuality.
One would anticipate an immediate short-term dollar bounce as global markets prepare for the potential heightening of the US-China trade war. As for the long term, although the Dow Jones reacted positively to Trump’s previous corporate tax cuts; more reforms would be needed to counter the negative effects of the aforementioned trade war.
There have been signs that Wall Street, no longer the political monolith it once was, has soured to Trump – indicating a lack of fear that equity markets would be negatively affected by a Biden win.
However, there is one outcome investors should be especially wary of: one in which Trump loses the electoral college but refuses to participate in a peaceful transfer of power.
A Contested Election
Trump’s consistent attempts to cast doubt on the legitimacy of this week’s election has inspired numerous American business leaders to warn the public about such a scenario, with LinkedIn co-founder Reid Hoffman recently stating: “the health of our economy and markets depends on the strength of our democracy", and that any dispute regarding the election’s outcome would "cause havoc in the business world”.
This is understandable. If 2020 has shown us anything, it’s that markets react negatively to instability and uncertainty. Uncertainty about who is the legitimate President of the United States, therefore, would imbue a fairly high amount of uncertainty into the global markets. This has essentially already been demonstrated throughout the year, with markets wavering each time Trump casts doubt concerning his eventual departure from office.
So, in summary, there are multiple ways that that different outcomes of this week’s presidential election could influence global market stability. For those nervous about their portfolios it is important not to make any rash decisions in a bid to secure short-term gains or to mitigate sudden unexpected losses.
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While the financial markets will undoubtedly react to the events listed above, investors should always take a long-term perspective. Understanding how currencies, commodities, and financial markets are likely to be affected by a changing geopolitical environment is always paramount; however, the long-term impact is always more consequential than the immediate one. Those hoping to make effective, prudent investment decisions would do well to remember this.
High Risk Investment Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information please refer to HYCM’s Risk Disclosure.
Early trading on Tuesday saw European and Asian markets rallying as millions of US citizens prepare to cast their votes in the 2020 presidential election.
In spite of renewed COVID-19 restrictions in the wake of a second wave of infections, European indexes drifted higher in early trading. London’s FTSE 100 added 88 points (1.6%), while gentler gains were seen elsewhere; Paris’s CAC 40 rose by 0.9%, followed by Berlin’s DAX at 0.6% and Madrid’s IBEX 35 at 0.5%.
After having fallen to a five-month low last week, the pan-European STOXX 600 index rose 1.3% in a second day of strong gains. Growth-sensitive sectors such as oil and gas, banks and miners showed optimism as well, with all rising more than 2%.
Meanwhile, Asian markets saw a similar surge. The Hong Kong Hang Seng rose 2.1% during trading, while the Shenzhen Component gained 1.2%. The Shanghai Composite was up 1.4%, as was Japan’s Nikkei.
US futures also took part in the global rally. The Dow Jones showed 0.7% higher, with S&P 500 futures up 0.6% and Nasdaq futures up 0.3%.
CMC Markets’ chief market analyst, Michael Hewson, attributed investor enthusiasm to polls showing a likely electoral victory for Joe Biden. “Markets are pricing for a Biden win, certainly a clear outcome, and they want a clear and uncontested outcome,” he said.
There is a good chance that a Trump upset or a split House and Senate could trigger a correction in the markets, Hewson continued. The state of Congress is particularly important, as a divided government will be unlikely to pass expedient fiscal stimulus.
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Analysts also noted that the market rebound was less robust than it appeared, owing to increased COVID-19 restrictions across Europe. The UK government is preparing to commit England to a month-long lockdown from Thursday, and new curbs on public gatherings are being introduced across Austria, Belgium, France, Germany, Italy, the Netherlands and Spain, creating widespread economic uncertainty.
Cryptocurrency hedge funds have made significant gains through 2020, vastly outperforming non-crypto funds.
Crypto Hedge Fund Vision Hill Composite Index, launched in 2018 to track the performance of actively managed cryptocurrency hedge funds, showed a 126% return in 2020. At the same time, BarclayHedge – which tracks over 7,1000 hedge funds – reported that non-crypto hedge fund sectors were also in positive territory, but posted comparatively modest gains of 1.70% through September.
One of the reasons behind crypto funds’ strong performance during 2020 stems from the emergence of decentralised finance, or DeFi, according to Vision Hill CEO Scott Army. “DeFi” refers to crypto platforms that facilitate lending outside of traditional banking institutions. These sites run on open infrastructure and make use of algorithms that track supply and demand to set rates in real time.
Data from industry site DeFi Pulse showed a total of $11.1 billion worth of loans on DeFi platforms as of Thursday, an increase of 180% from the roughly $4 billion recorded in August.
Michael Anderson, co-founder of $100-million venture capital fund and DeFi investor Framework Ventures, said that he believes DeFi will soon break into the mainstream. “Users are trying to vote with their dollars in terms of how they view the capabilities of DeFi,” he said, noting that some DeFi platforms have gained more volume than the far larger digital asset exchanges.
Hedge funds were also boosted by the strength of bitcoin. After a record market slide in March, the currency bounced back quickly, jumping more than 10% in April and going on to rise 80% above its 2019 price. The surge drove rallies in the crypto market, with a knock-on effect on hedge funds.
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Adding to crypto’s attraction, large-scale organisations have entered the market this year, accelerating the progress of crypto’s adoption into the mainstream. Earlier this month, PayPal announced plans to allow the trading and holding of cryptocurrencies on its platform. This triggered a new surge in the value of bitcoin, which jumped above $13,000 following the news.
Giles Coghlan, Chief Currency Analyst at HYCM, provides Finance Monthly with his insight into how the balance of markets and currencies may shift as December looms.
Brexit negotiations recently risked falling off the cliff edge as political posturing reached new heights. In the lead-up to the EU Leaders Summit on 15 October, Prime Minister Boris Johnson said the UK would stop negotiations outright if no credible progress was being made. Of course, in such a scenario, this would then open the door to a no-deal Brexit potentially unfolding.
The British pound has certainly been bearing the brunt of these Brexit worries throughout 2020, with sterling often falling to prices not consistently seen since the 1980s.
However, contrary to the forecasts of some commentators, talks have now advanced, and to put it in the words of EU officials: “intensified”. Those who believed a deal could be struck often reflected on how the initial withdrawal agreement was only agreed to mere weeks before the end of 2019, and it seems the UK government seeks to replicate such last-minute compromises as the final Brexit hurdle approaches.
So, after much grandstanding and posturing, daily talks have begun in an attempt to solidify a deal within three weeks, allowing the minimum amount of time needed to implement a post-Brexit trading relationship before 31 December.
Investors and traders must remain vigilant and aware of all the possibilities on the horizon. That’s why now is an ideal time to consider these possibilities and the impact they could have on the pound and financial markets more generally.
Investors and traders must remain vigilant and aware of all the possibilities on the horizon.
A clean break?
At the moment, it is still possible for a deal to be agreed upon by London and Brussels. Looking beyond the political rhetoric and grandstanding on display from both sides of the channel, a no-deal Brexit is not an ideal outcome for either parties. Of all the reasons, the sheer uncertainty and potential disruption that could be caused are of top concern.
So, if an agreement is made, this is expected to have an immediate impact on the value of the pound. We could see the pound instantly jump to $1.35 against the dollar, especially if the UK retains the same level of Single Market access as enjoyed previously. With goods still able to freely move between the UK and its European neighbours, a fruitful deal would dispel the long-standing uncertainty that has overshadowed UK economic forecasts since 2016. Sterling would undoubtedly benefit massively from the lifting of this worry from the minds of investors.
However, a final breakdown of negotiations and a no-deal Brexit is still something to be considered seriously. This outcome would likely incur an immediate devaluation of the pound to approximately $1.20, with the potential to fall further as the logistical issues of the UK’s new import/export reality are fully realised.
The third outcome, an extension of the withdrawal period and the continuation of negotiations, would likely provide a small boost to sterling’s value but not change the weekly volatility we’ve seen from the pound throughout 2020. Admittedly, such an outcome would require a re-ratification of the withdrawal agreement and signing off from all 27 EU state leaders who, given the ongoing COVID-19 crisis, may not be inclined to allow Brexit to distract from other pressing concerns for another year.
Regardless of if a deal is agreed upon or not, however, there will be other factors that could potentially affect sterling’s value in the foreign exchange markets. From geopolitics to COVID-19, I believe it is vital for investors to stay abreast of other unfolding trends that are affecting currency values in 2020.
We could see the pound instantly jump to $1.35 against the dollar, especially if the UK retains the same level of Single Market access as enjoyed previously.
Global factors
The recent jump in the pound’s value as a result of Brexit talks resuming in earnest was accompanied by a drop in the dollar’s value. This was seen as a consequence of stalling US Congressional talks regarding a COVID-19 relief package. Potentially more impactful for the dollar, though, is the upcoming US presidential election. Regardless of which candidate wins, a contested election – in which a candidate questions the validity of the results – could see the dollar’s value rapidly rise in risk off flows. The USD has been acting as a safe haven currency during the COVID-19 crisis and any potential of a Trump win would be seen as USD positive as US protectionist policies would look set to continue. However, the medium-term pressure on the USD favours a selling bias on record QE levels with interest rates set to remain low until 2023, according to the Federal Reserve’s latest minutes. If a Brexit deal is secured around the same time, some further GBP/USD upside could be encouraged by outflows from the USD.
Looking to the Bank of England (BoE), another potential change in sterling’s value could come as a result of negative interest rates. BoE governor Andrew Bailey has repeatedly confirmed such a policy is ‘in the BoE’s toolbox’ since August, demonstrating that this could help spur the country’s post-pandemic economic recovery. Thankfully for those unconvinced by this controversial policy, BoE deputy governor Dave Ramsden this week reassured investors that it was still not yet the ‘right time’ for such measures to be introduced.
Investors on alert
In summary, there are multiple ways the value of the sterling could be affected by geopolitical events this year. Volatility remains rife across global currency markets, and there is no indication of this volatility disappearing anytime soon.
This is especially relevant for investors, as research commissioned by HYCM earlier this year demonstrated that cash savings have become the premier asset class for those concerned about market uncertainty. Of the 900 investors surveyed, a massive 78% held cash savings, as opposed to the 48% with stocks and shares and 38% with property.
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So, for such investors with liquid-asset-heavy portfolios, keeping informed regarding the UK’s geopolitical situation is paramount for avoiding a sudden portfolio devaluation. Or, conversely, one should consider alternate safe-haven assets that also allow for hedging against uncertainty, such as gold, silver, copper or cryptocurrency, without the risk of long-term devaluation through basic monetary inflation.
Regardless of one’s specific strategy, investors and traders would do well to ensure they keep a level, informed head when approaching financial decisions in 2020. Despite any future potential uncertainty, I firmly believe there are still great investment opportunities to be found as the UK begins its transition outside of the EU. The challenge is finding them.
High Risk Investment Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information please refer to HYCM’s Risk Disclosure.
US markets are bracing for a shaky run-up to Election Day on 3 November, with fears of an unfavourable outcome in Washington compounding already existing fears of the COVID-19 pandemic and the halting of negotiations over further economic stimulus.
Stocks fell sharply on Monday on the back of two record days for recorded coronavirus cases in the US. The S&P 500 fell a full 1.9%, while the Dow Jones Industrial Average and Nasdaq slumped 2.3% and 1.6% respectively. Overall, the markets experienced their worst day in a month.
Signs of caution were also seen elsewhere as Treasury yields pulled back from last week’s high and remained steady at 0.8% through to Tuesday. The Cboe Volatility Index, often referred to as the market’s “fear gauge”, rose to 32.46, the highest closing level seen since 3 September.
Worries were further compounded by news that the Senate would adjourn from Monday until 9 November, effectively ending hopes of passing a COVID-19 stimulus package before the election.
At the moment, investors appear to be banking on a victory for Joe Biden, with many buying stocks in cannabis and alternative energy on the expectation that they will benefit from his proposed policies. Bond yields have also climbed, in part due to expectations of greater stimulus under a Biden presidency.
However, these options slid somewhat on Monday, with bond yields dipping and the Invesco Solar ETF falling 2.1%.
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Tim Ghriskey, chief investment strategist at Inverness Counsel, said that the precipitous drop in the stock market on Monday was “to do with the lack of a stimulus package and concerns about the pending election”. “There’s nervousness on both those issues,” he noted.
Stocks experienced a sharp sell-off on Monday, with a significant rise in COVID-19 cases in Europe and the Americas and a US stimulus deal still nowhere in sight.
In Europe, the DAX opened 2.7% down, while the CAC 40 fell 1.4% and the FTSE 100 fell 1.1%. Milan’s FTSE MIB shed 1.5%, and Spain’s IBEX dropped 1%.
Asian markets showed more mixed results overnight, with South Korea’s KOSPI and China’s Shenzen Component both gaining 0.5% while Japan’s Nikkei ended flat and the Shanghai Composite fell by 0.8%. The Hong Kong Hang Seng rose by 0.5%.
US futures also opened far lower, with futures attached to the S&P 500 and Dow Jones Industrial Average both falling by 1% and Nasdaq futures falling by 0.8%. The slump points to a probable sell-off when Wall Street opens later today.
The US saw its highest ever daily total of confirmed new COVID-19 cases on Friday, rising as high as 83,757 – a total that was almost reached again on Saturday.
France also recorded a new daily case high over the weekend, with 52,010 positive cases confirmed on Sunday. A 9pm curfew across two-thirds of France came into force on Friday night, while Italy and Spain announced tighter measures on Sunday. Spain has now declared a state of emergency.
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Oil prices also saw a slide in advance of a Libyan expansion in crude production, causing demand concerns that have been compounded by the global surge in COVID-19 cases. West Texas Intermediate Crude fell 3.3%, trading at $38.54, while Brent crude fell 2.25% to $40.83 per barrel.
A pricing war earlier this year, in conjunction with the early onset of the COVID-19 pandemic, led to a precipitous global decline in oil prices, with West Texas Intermediate prices falling below 0% for the first time in history.
European and Asian markets showed mixed results on Tuesday as concerns mounted over the continued spread of the COVID-19 pandemic and a fast-approaching deadline for an agreement to be reached on US fiscal stimulus.
As markets opened in London, the FTSE 100 was down a mild 0.03%, while Germany’s DAX and France’s CAC 40 both slumped by 0.3%. The pan-European Stoxx 600 opened 0.2% lower and saw little change during the session, pairing its earlier losses.
Asia-Pacific stocks also showed caution, with Australia’s S&P/ASX200 ending down 0.7% and Japan’s Nikkei falling by 0.44%. China’s CSI 300 bucked the trend by gaining 0.6%.
Following losses in Monday trading – with the Nasdaq, S&P 500 and Dow Jones Industrial Average shedding 1.7%, 1.6% and 1.4% respectively – US futures rose as markets opened on Tuesday. The Dow rose 0.7% higher, while the S&P 500 and Nasdaq both added 0.8%.
Governments in Europe have begun to reimpose lockdown restrictions as the confirmed number of global coronavirus cases rises above 40 million. In the UK, Wales has announced a two-week “firebreak” commencing from Friday, in which people will be expected to remain at home while non-essential shops including pubs and restaurants are closed.
Ireland will also go into lockdown from Wednesday. Additionally, Austria has limited gatherings to six people indoors and twelve outdoors, and Slovenia has announced a 9pm-6am curfew to commence from Tuesday.
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Meanwhile in the US, Tuesday marks a deadline for a new fiscal stimulus deal from Washington. Though US House speaker Nancy Pelosi and Treasury secretary Steven Mnuchin spoke late on Monday regarding a potential stimulus package, Pelosi told fellow Democratic lawmakers that there are still significant areas of disagreement standing between them and a deal.
Sebastian Galy, senior macro-strategist at Nordea Asset Management, noted: “Even if there is a deal with the White House on this final day of negotiation, it might not be accepted by Republicans in the Senate."
According to a Democratic spokesperson, staff under Pelosi and Mnuchin are continuing to work “around the clock” to strike a deal by Tuesday evening.
Oleg Giberstein, co-founder of Coinrule, offers new investors some advice on bad habits to avoid and potential avenues of interest to pursue.
There seems to be a widely accepted narrative that ‘normal’ people can’t make money investing. They should simply put their funds into a so-called robo-advisor which will put their cash into index-tracking passive investment funds.
In reality, this type of investing (known as ‘black box’ investing) is a terrible idea. It involves a computer using complicated formulas to achieve returns. However, because an investor may not understand the model, it can lead to unforeseen problems that the investor is unable to react to or even mitigate. This investment approach also goes against the unfolding fintech trends. It looks backwards to when investing was for the elite. However, investment is being democratised.
So, how can the non-professional investor get the most out of the markets?
1. Avoid robo-advisors
Robo-advisors are a class of financial advisers that provide advice or investment management online with moderate to minimal human intervention. Their advice is based on mathematical rules or algorithms only. They charge a management fee, often 1% of your funds.
Although passive-investing has worked while the markets have been going up, this won’t go on forever. Remember Michael Burry in 'The Big Short' who predicted the Subprime Mortgage crisis leading to the financial crisis of 2008/09? He is now warning that Index Funds are the next massive bubble.
Although passive-investing has worked while the markets have been going up, this won’t go on forever.
Action:
With some research, anyone can create their own long-term, low-cost multi-asset fund held via a platform, with total costs below 0.5%. Explore platforms like eToro or IG Index to buy an index fund that holds a range of stocks directly, or create your own.
To spread your risk, pick stocks from different industries and decide what percentage of your portfolio you want to allocate. If that percentage becomes higher or lower over time, you can buy or sell to balance it out.
2. Don’t chase trends
When the dotcom bubble collapsed, those left holding worthless stocks were mostly the retail investors who’d been lured into buying the ‘trend-of-the-day’. The trend-of-the-day today is passive investing into index funds.
Action:
I keep the majority of my funds in safe, liquid assets with only about 20% of my portfolio invested in high-risk high-reward assets, like cryptocurrencies or certain tech stocks. This is called a ‘Barbell strategy’ and has become better known thanks to professor and trader Nassim Taleb, author of ‘Black Swan’.
Cash in a 0.1% rate savings account doesn’t seem attractive, but having the majority of your money in cash, gold or bonds, means you’re protected. And you can buy when everyone else is panic-selling during a market crash because you have cash available.
3. Use advanced trading tools
Robo-advisors give you average annual returns in normal times. But when times are bad, I wouldn’t want to be sitting in an index fund when everybody is trying to get out at the same time.
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Those who get out ahead of everyone else are the ones who won’t suffer. When markets dropped over 30% in March 2020, Hedge Fund Pershing Square reported $2.6 billion in profits in under a month.
Action:
Hobby investors tend to shy away from anything more complex than buying and selling. But they miss out on major market opportunities. A simple ‘Put’ option can act as an insurance that allows you to sell a certain financial asset at a predetermined price: perfect when you want to protect yourself against a market drop.
Moreover, automated trading rules allow hobby investors to use algorithms to trade like professionals. Platforms like Coinrule provide the tools to build strategies that protect against losses and help catch market opportunities. By designing and then automating the strategy you don’t need to sit by the computer all day. Innovation is starting to provide access to the markets for more and more people.
4. Keep learning
Trading and investing is hard. However, most of the problems holding normal people back are related to access. Access to the right trading instruments, the right knowledge and the necessary experience. If you just put your money into a passive fund, you never learn and are forever victim to whatever crisis hits the market.
Action:
Study the markets. Books like 'The Intelligent Investor' by Benjamin Graham, 'What I Learned Losing a Million Dollars' by Paul and Moynihan and others provide great introductions. Tools like TradingView make chart reading accessible. Free resources and communities allow normal people to get up to speed quicker than ever.
If you just put your money into a passive fund, you never learn and are forever victim to whatever crisis hits the market.
5. Decide for yourself
Platforms like Robinhood, Freetrade or Revolut have taken the retail online investing market by storm. But they don’t go far enough when it comes to financial inclusion.
The need for a market that at least has the potential for full transparency, fast learning and large opportunities is there. And cool new tech is making it a reality.
Action:
Do your own research. Learn to make your own judgements. Use the platforms and tools that offer full transparency and have the ethics that you value. Companies like Luno, eToro, Coinrule, Kraken and TradingView stand out as frontrunners in making exciting investment opportunities accessible to normal people.
Conclusion
Does trading take time? Is there risk? Yes. But it’s better to face the risks instead of sheepishly following the crowd and pretending it’s risk-free. We need to take responsibility for our finances. It is better to fail and to learn than never to try. And people are starting to buy into this vision. Opportunities abound for the non-professional - and they aren’t disappearing anytime soon.
US, European and Asian equity futures fell sharply on Friday in response to news that US president Donald Trump and first lady Melania Trump had tested positive for coronavirus.
“Tonight, @FLOTUS and I tested positive for COVID-19. We will begin our quarantine and recovery process immediately. We will get through this TOGETHER!” Trump said in a tweet on Friday morning.
The White House also released a letter from the president’s physician, Dr Sean Conley, saying that he and the White House medical team will “maintain a vigilant watch” over Trump’s health. “Rest assured I expect the President to continue carrying out his duties without disruption while recovering, and I will keep you updated on any future developments,” he wrote.
The news had a swift impact on global stocks. Japan’s Nikkei closed 0.6% down in a reversal of its earlier gains, and Australia’s ASX 200 closed 1.4% down.
European markets fell at the open, with the German DAX, French CAC 40 and UK FTSE 100 falling by 1.4%, 1.3% and 1.1% respectively. The pan-European Stoxx 600 also fell 0.8% in early trading.
US futures naturally took a hit, with S&P 500 and Dow Jones futures each losing 1.2% while Nasdaq futures fell by 1.6%. Overnight in mainland China, the Shenzen Component ended flat and the Shanghai Composite closed down 0.2%, while the Hong Kong Hang Seng rose 0.8%.
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“This is potentially a strong market negative,” said Jeffrey Halley, senior market analyst at Asia Pacific OANDA, noting that the possibility of COVID-19 spreading to Senate leadership could damage markets and the wider economy further by potentially halting recently resumed negotiations over fiscal stimulus.
Market analysts have been paying close attention to the looming presidential election, with deVere Group noting that investors’ greatest fear for 2020 is the possibility of a disputed result.
European stocks opened cautiously on Wednesday morning as investors woke to the aftermath of the first US presidential debate between incumbent Donald Trump and Democratic challenger Joe Biden, which was marked by rancorous exchanges.
The French CAC 40 and German DAX were both down 0.2% in early trading, while the FTSE 100 inched up 0.1%.
US futures dipped in the hours following the debate, with S&P 500 futures falling as much as 1.3% before settling at 0.7% down on Wednesday morning. Dow Jones futures and Nasdaq futures were both trading 0.8% lower.
Bitcoin was also trading 2% down on Wednesday morning. The value of the dollar held steady.
With a little over a month to go before 3 November, investors are paying close attention to the US election, the outcome of which will shape the future of the world’s largest economy for years.
A contested presidential election is currently the number one concern for global investors, according to a poll from deVere Group. 72% of respondents described a contested US election as their “biggest investment worry for the rest of 2020”, with 18% fearing a COVID-19 second wave and 5% fearing a US-China trade war. The remaining 5% described other geopolitical issues, including Brexit.
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“Investors around the world are beginning to freak about the US presidential election,” deVere Group CEO and founder Nigel Green commented, noting that the possibility of a disputed outcome sparked greater fears than a Biden or Trump victory.
Shares in Tesla Inc. fell by 7% on Tuesday in the wake of CEO Elon Musk’s promises of a radically cheaper new electric car battery for self-driving Tesla vehicles – which is not likely to arrive for three years.
During a presentation on Tuesday, which Musk had touted as “Battery Day”, Musk and other Tesla executives pledged to slash battery costs in half through the use of new technology and processes, delivering an “affordable” electric car. Costs would be cut so radically that a self-driving $25,000 car would be possible, but only “in about three years’ time”.
The announcement, which did not contain any mention of Tesla’s speculated development of a “million-mile” battery or a specific cost reduction target to beat petrol-based vehicles, prompted disappointment and preceded a sharply negative shift in investor sentiment.
The resulting stock slide wiped out $50 billion of value in the company, with shares closing 5.6% down and then falling a further 6.9% after hours.
"Panasonic and other suppliers were hit with Tesla planning to make its own battery,” commented Neil Wilson, senior markets analyst at Markets.com. “Nevertheless, given all the anticipation around a potential game-changer in battery technology, investors were a little underwhelmed by the news."
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Musk had sought to downplay expectations for the event on Monday, stating in a tweet that some of the technologies to be revealed “will not reach serious high-volume production until 2022.”
Tesla shares have gained 407% since the start of 2020, drastically above the 2.6% gains seen by the S&P 500 index this year.
