Market Update – 08 Sep 2020

Well feeling chilled out,  as I mentioned in my last update, sadly didn’t last very long.

Firstly, the FTSE did the Hokey Cokey last week on the back of the Brexit talks, yes I’m afraid it’s back to Brexit talks and last week it was heavily reported that agreements couldn’t be reached.     Then the government announced more local lockdowns and rising R rates which dominated the news and today it’s reported that the Prime Minister has now announced that failure to have certain agreements by the end of October will result in the UK walking away from talks and a No Deal Brexit.

Is it just me or is this just deja vu,  it seems we have been here before!

As the UK and Europe prepare more ‘tit for tat’ sound bites, the reality is we are leaving the EU.  We can therefore expect the devolved governments to comment on the potential impact of Brexit , the Yes and No campaigners will make more noises before the separation and all of this will lead to market volatility and on top of Covid 19 you will understand why I’m feeling less chilled.     And if that wasn’t enough the weekend included studying and believe me Taxation and Trusts is about as exciting as it sounds!

As mentioned this last week has seen considerable volatility in the UK Markets so I’m taking a closer look at the UK market in this update.

Today some robust performance by London’s small band of blue-chip tech stocks stabilised the jittery nerves. Scottish Mortgage Investment Trust, which holds a significant stake in Elon Musk’s electric car business Tesla, was the biggest riser in the FTSE 100 index after a 5% rebound to 889.5p. There were also gains of 3% for cyber security business Avast and fast-growing industrial software firm Aveva.

US tech stocks including Apple and Amazon have driven Wall Street markets to record highs in recent weeks, although profit-taking on Thursday and Friday raised fears that the boom times might be drawing to a close.

With US markets closed for Labor Day, the FTSE 100 index was 72.63 points higher at 5871.95 as Europe recouped some of the heavy losses seen at the end of last week.

The rising prospect of a No-Deal Brexit hit sentiment in UK shares but that was balanced out by a corresponding fall in the pound.

A potential bidding war for America’s biggest fleet of yellow school buses helped spark a much-needed recovery for transport giant FirstGroup shares.  The private equity speculation involving the potential £3 billion sale of FirstGroup’s North American businesses FirstStudent and FirstTransit helped shares rally 14%.

Vets products firm Dechra Pharmaceuticals jumped after it hiked its dividend by 8.5% and said trading in the first few weeks of its new financial year had been encouraging.

Speciality chemicals company Elementis, whose additives are used in anti-perspirants, rose 2% after banking covenant tests were relaxed to cover all of next year. It is also on track to achieve a significant debt reduction. Analysts at Jefferies, said the covenant agreement reduced risk in the event of further Covid lockdowns.

And a Brighton-based biotech firm focused on hospital superbugs has revealed its involvement in a potential preventative treatment for Covid-19.  AIM-listed Destiny Pharma’s shares surged 15% to a one-year high of 56.4p on the collaboration with fellow UK biotech SporeGen. As an “easy to use” first line of defence, Destiny said the product has the potential to reduce Covid-19 infection rates and transmission significantly.

A grant of £800,000 from Innovate UK is supporting the project, which could enter first human clinical trials within 18 months.

But that’s enough about the UK market for this week, it’s enough to say that volatility will continue so hold on.

To close this week I wanted to share a new segment which will see me share some of the wider industry happenings.

One of the most topical aspects at the moment is technology usage.  During lockdown it’s increased considerably and a recent report has suggested that clients might be driven to seek more frequent but shorter contact with their adviser.  Holly Mackay, founder of Boring Money, who conducted the research, said many clients saw visiting their IFA as a hassle as they had to travel or take time out of their busy schedule. She said a few 15-minute calls rather than a long, formal meeting could be a better use of everybody’s time.

Now I’m not sure if this will be the case and I would be pleased to hear your views.

One thing I do know however is that we will shortly look to introduce more technology so watch out for some communication about the Personal Finance Portal that we will introduce.  With data security being one of our upmost priorities you will be invited to our new, secure online portal.

Until then, stay safe.