Britain’s no deal | Flow Traders Investment Competition | Week 11

Global markets finished the week strong despite the continued shutdown of the U.S. government and painful rejection of May’s Brexit deal by UK parliament. U.S. indexes had a particularly good week, with the Dow Jones Industrial Average finishing up +3.45% and the S&P 500 closing the week +3.50% higher. The much-needed optimism spread to the other side of the pond as well, with the Eurostoxx 50 largest European companies edging +2.43% and the Dutch AEX index finishing +3.01% higher for the week. Overall, the FTSE Global All-Cap index notched another +2.40% as global investors took a quick break from the worries carried on from last year.

In the U.S., stocks rallied Friday on reports that China may be prepared to make new trade concessions to avoid an all-out trade war between the world’s two largest economies; all sectors of the S&P 500 index finished the week in the black. However, the longest U.S. government shutdown in history continues as Trump and the Democrats have not reached an agreement over the infamous $ 5.7 billion Mexican border wall. Netflix’s disappointing earnings announcement also did not dampen investor’s good mood for the week, with revenue coming in below forecast.  Though the stock was sent down -3.8% on the news, it closed Friday around even as gains made earlier this week on reports of raising prices for U.S. customers were cancelled out.

In Europe, meanwhile, all eyes were on the U.K. as May’s ‘soft’ Brexit deal was thrashed by parliament. Last Tuesday, MPs voted 432 against versus 202 for the deal –resulting in a historic defeat by 230 votes (the largest of any UK government in history). May was given no time to recover as she narrowly survived a vote of no confidence the day after. This rejection of a ‘soft’ Brexit has made the March 29 deadline to leave the European Union practically unachievable and has put the future of the country further into question. In other news, Germany has followed the U.S and U.K. by banning Huawei from supplying its next generation 5G network for mobile phones. The decision comes amid suspicions that the Chinese telecoms giant is committing espionage. A few weeks earlier, Huawei’s CFO was arrested in Canada on American charges of breaking sanctions against Iran.

Our investment groups have benefited from this week of recovery by making some smart moves. Thanks to a strong earnings report by Goldman Sachs this week, Primus’ position in the notorious investment bank is now up more than 21% while their stake in chemical company Dow DuPont is returning 15%. Floryn Vrouwen are also making the most of the new year, having sold shares in Dutch payments provider Adyen for a nice profit and gaining 3.7% on their S&P 500 ETF. Phoenix has also earned a mention in this week’s update, winning more than 20% on their investment in women’s clothing store J.Jill. Overall it has been a great week –let’s try to keep it up!

Jasper Thouin