It has been a tense week for global markets as fears of a US-China trade war re-emerged. Though this made investors nervous, the American S&P500 and Dow Jones indexes still managed to finish the week up +0.67% and +0.75% from Monday’s open. This is largely thanks to President Trump’s reassurances that a pact would be reached between the two nations. This also comforted European investors, as did solid macroeconomic figures from Germany and France. The Eurostoxx 50 index etched another +1.88% for the week while the Dutch AEX index rose +1.50%. Globally, markets finished the week flat as measured by the highly diversified FTSE Global All-Cap Index.
Washington and Beijing exchanged a fresh round of tariffs this week as fears of a trade war were reignited. Nevertheless, President Trump was quick to comfort investors that an end was in sight and an agreement would be reached. This had better come quick, seeing that Beijing imposed tariffs on $60bln of American imports on Monday as the Renminbi reached a new low for 2019. In an uncharacteristic move, Trump decided to delay tariffs on imported vehicles and auto parts by as much as six months –much to the relief of German carmakers. One American carmaker was not so lucky this week as reports emerged that Tesla’s autopilot system could be at fault for another fatal crash. Investors were quick to react and did so sharply, sending the stock down -7.6% on Friday to its lowest level since December 2016.
Things were not much calmer on the other side of the pond amid a fresh political scandal concerning the Austrian Vice-Chancellor Strache. Covert films dating to 2017 emerged of Strache offering lucrative construction contracts from the Austrian government to representatives of a Russian oligarch. In return, it is reported that this oligarch would purchase the Kroning Zeitung, Austria’s largest newspaper. The contents of this newspaper would be biased towards the right-wing populist Freedom Party, of which Strache is the leader, to help the party gain votes in an upcoming election at the time. Stache has resigned in the wake of this scandal but claims that it was a political trap from opposition parties. Also this week, the IMF published its annual assessment of the German economy. While the country was praised for its historic low unemployment, it was called upon to lower taxes for poor households, decrease its current account surplus, and boost infrastructure spending. German carmakers were also criticized for not shifting to the production of electric cars soon enough. France, meanwhile, could also offer a reassuring report that its unemployment had dropped to 10 year low. This is following President Macron’s economic reforms which were met with strict resistance in the highly publicized ‘yellow vest’ protests. Nevertheless, the country’s unemployment remains more than double that of its German neighbour while youth unemployment is almost four times as high.
K2 Capital is the new leader of the Flow Traders Investment Competition! Thanks to gains on their investments in video game producer Take Two Interactive and Pay Pal, the group managed to swoop first place from Omega Investments. Last week’s leaders have now dropped down to third due to losses on biopharma company resTORbio as Atlas Capital rose four ranks to claim second place. The riser of the week, however, is Next Generation which leapfrogged an impressive six places thanks to their perfectly timed investment in Cisco and sale of Alibaba. Phoenix, meanwhile, is the loser of the week having dropped four places from their position in football club Ajax and a call option on Dutch manufacturing company Koninklijke BAM. Liquid Gold also had a rough week and remains at the very bottom of the board from big losses in Coca-Cola and a speculative EUR/Turkish Lira turbo long position gone wrong. Finally, Merx also lost out this week from gaming accessory company Turtle Beach and Hospitality Holdings. As the end of this year’s competition slowly comes into sight, will K2 Capital manage to stay in the lead? Or will another group snatch the prize right in the last minute? One thing is for sure –this year’s competition will be one to remember!
Written by Jasper Thouin