Glass half empty time amid geo-political tensions
- US-Chinese tensions spread unease among investors after shooting down of ‘spy’ balloon.
- FTSE 100 opens lower, slipping away from Friday’s record close.
- Pound hovers around $1.20 amid expectations that the Fed will have to keep raising rates.
- New dawn for Northumberland giga-factory as Australia’s Recharge is given preferred bid status after Britishvolt collapse
- Frasers Group browses shopping centre purchases as it focuses on multi-channel approach.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown:”It’s glass half empty time on financial markets as unease spreads about a deteriorating geo-political backdrop and realisation that more interest rate hikes are set to be inflicted on economies. The shooting down of a suspected Chinese spy balloon off the coast of South Carolina has dashed hopes that reproachment between Washington and China could be achieved, causing a slide on the Hang Seng in Hong Kong and the Shanghai Composite. There is a chance this could be a short-lived wobble, given that the US State Department appears to have kept the diplomatic doors open, suggesting a planned visit to China by US State Secretary Anthony Blinken could happen as soon as conditions allow.
The FTSE 100 has opened lower, drifting away from all-time high summit reached on Friday. The nervousness about what an escalation in tensions could mean for global growth is likely to limit another immediate heady ascent for stocks. The pound has crept up a little against the dollar but is still hovering at month-long lows at $1.20 which should continue to provide support for globally focused giants on the index, which earn in dollars. There is worry resurfacing about what Friday’s super-strong US jobs figure signifies about just how tight the Federal Reserve will turn its monetary screws to continue to squeeze inflation and whether that could still hurtle the economy towards a harder landing, despite its robust showing so far.
A new dawn is breaking for the UK electric car industry, with fresh light now on the horizon for the development of a giga-factory in Northumberland. The collapse of Britishvolt, was considered to be a major setback for stable supply chains for motor-manufacturers, but the Australia based Recharge Industries has galloped in with an offer and has now been named as the preferred bidder. The fact that Recharge is a start-up rather than a larger more established player may raise worries that it may also have bitten off more than it can chew, given the problems encountered by Britishvolt, and the difficulties it faced accessing funding. However, it keeps the dream alive for three thousand new jobs in the region and will provide a vital cog in the production wheel for the industry, given that gigafactories closer to car manufacturing hubs are considered increasingly important at a time when global supply chains have turned more brittle.
Reports that Frasers Group is in final negotiation to buy two shopping centres for around £100m indicates the company’s expectation that a physical shopping experience will remain a super-important avenue in the future of retail. As the pandemic habits of virtual store browsing have rolled back, and shoppers have relished nosing around racks of goods once more, it’s clear getting the multi-channel approach right is crucial. Frasers Group has a track record of snapping up companies in the bargain bin, and clearly sees price opportunity in The Mall in Luton and the Overgate centre in Dublin after retail real estate value was severely dented by the pandemic rout.’’
