Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
THE panic at UK petrol stations has not yet spread to financial markets, with stocks posting modest gains as the week got underway.
Britain’s supply chain problems could not derail the recovery from last week’s stock market wobble, with the FTSE 100 rising sharply on opening before settling back to sit a little higher by lunchtime on Monday. There was a similar rise for the Euro Stoxx 50, while the Hang Seng was broadly level and the Dow in the US was predicted to rise as well.
The positive mood for shares seemed at odds with the gloomy news in the energy markets. The price of oil has hit a two-month high as various metrics spiked. US inventories have dropped to the lowest level since 2018 and shipping costs for oil have jumped to a 13-year high.
It only adds to a complicated picture for energy prices. The consensus appears to be that a drawback in energy investment during the pandemic, when demand dipped, has left the market under-supplied as the world slowly gets back to normal.
There may also be political considerations for the market to contend with this week, as US lawmakers argue over an infrastructure spending package and a renewal of the debt ceiling. Congress must pass a new budget by the end of September to avoid a shutdown, and lawmakers must also figure out a way to increase or suspend the debt ceiling in October before the U.S. defaults on its debt for the first time.
The other international news this week includes the result of German elections, where the Social Democratic Party gained power in a narrow election, pushing out the Christian Democratic Party of outgoing Chancellor Angela Merkel. While that would have once signalled greater instability in Germany - and potentially a market reaction - the change appears priced-in and the response so far has been muted.
In company news this week, investors in easyJet must decide whether to agree a rights issue that was announced earlier this month. The airline has suffered, of course, during the pandemic and debt has risen significantly, but the £1.2 billion cash injection was higher than the market expected and investors will need convincing that easyJet has a pressing need for the money.
Elsewhere, crypto currency prices have suffered a rocky few days after the Chinese government announced further restrictions on crypto activity in the country. In co-ordinated action, 10 Chinese government bodies including the central bank said overseas crypto exchanges were barred from providing services to mainland investors via the internet. The news saw the price of Bitcoin tumble 8% but prices have recovered some of that ground since.
Finally, the economic calendar this week is relatively quiet but does include house price data from the Office for National Statistics and Nationwide, as well as consumer confidence figures from the US, France and Germany.
Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.
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