5 things we learned this week

FROM Barbie’s big-screen debut to the legacy carmakers left in Tesla’s wake, this is your round-up of five news stories that moved the markets this week.

1. Re-mortgaging might not be quite as expensive as we all feared

OK, you might not feel it when you do the weekly shop (food inflation is still running stomach-churningly high at 14.9%) but the numbers show that overall, annual inflation dropped to 7.9% in June, from 8.7% in May.

After months of watching and weeping as the cost of living has continued to rise and wage growth has threatened to push interest rates higher and higher, we finally spotted a patch of blue sky amid the thunder clouds that have been hanging heavily over the UK.

It’s early days and one swallow does not a summer make, as they say, but there’s now a decent chance that the Bank of England may be able to pull back on any further drastic base rate hikes. And there’s some potential relief for mortgages.

As soon as the latest data was out, the average two-year fixed rate mortgage dipped from 6.81% to 6.79% - indicating that mortgage rates, which had been creeping ever-higher may not end up being quite as high as had been feared just days before.

2. Rival EV makers are racing to keep up with Tesla

First, Tesla slashed its prices - much to the ire of existing Tesla-owners worldwide - and now Ford’s gone and done the same. Citing lower battery raw materials costs, Ford announced it was cutting the price of its flagship electric pick-up truck, following in Tesla’s tracks after it cut prices on two of its best-selling cars in January.

Despite the new prices driving sales higher at both automakers, investors clearly didn’t like this reverse gear manoeuvre - with shares in General Motors, Rivian and Ford all tanking. Tesla was the only winner, up 1.7%.

Why? Most probably the legacy issue, which means traditional carmakers like Ford, don’t yet write their own software (instead outsourcing it to hundreds of individual component manufacturers) leaving them several laps behind Tesla when it comes to speed of innovation.

3. China’s economy is being left out in the cold

The Chinese economy seems to have lost a bit of its momentum in the second quarter, following a positive first six months after Covid re-opening suggested data would be stronger than it has been.

Falling exports, weak retail sales and a lacklustre property sector will put pressure on Beijing to ramp up stimulus measures and get the economy growing after years of restrictions. And that’s something that hasn’t gone unnoticed by investors.

Data suggests that while foreign investors are keen to invest in Asian emerging markets, China’s getting the cold-shoulder. For the first time in six years, investor optimism about Chinese growth is waning.

4. Get your bags packed, summer is back on

News that strikes by some of the workers at Gatwick Airport involved in pay disputes have been suspended, meaning action scheduled to take place from 28 July to 1 August will now not go ahead, could mean the 9,000 or so easyJet passengers left flightless find their holidays are back on. They could do with a break.

The UK’s cash-strapped holidaymakers have had to fork out more for this year’s holiday abroad - a factor that has helped easyJet lift revenue per seat to increase by around 23% year on year, according to its latest trading update. And seen its Q3 profits hit a record high.

The budget airline says it’s on track to deliver record profits in the final quarter, with winter bookings set to be up 100% year on year.

5. “Life is fantastic” for Barbie-owner Mattel and its investors

And finally, plastic has proven to be fantastic for investors in Mattel after the toymaker’s shares have jumped 22% so far this year ahead of today’s release of the ‘hotly pink’ Barbie movie.

Chief Operating Officer Richard Dickson said 2023 is going to be a ‘legacy-making year’ for the toymaker.

The Barbie-mania in the lead up to the film release has contributed to a 22% surge in the toymaker’s share price since the start of the year - although they're still far off the record highs seen a decade ago.

Mattel share price (US$) over the last 5 years

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