Weekly Newsletters
26 March 2021 | William Buckhurst
That Was The Week That Was
MACRO
- In the UK, CPI came in at 0.4% for the 12 months to the end of February, lower than expected, as clothing and second-hand cars drove the inflation rate downwards
- As events of the last year have further exacerbated the pressure on high street retailers, John Lewis announced that they would be closing a further eight stores
- In the US, the Federal Reserve did not extend looser capital requirements for US banks introduced at the start of the pandemic
STATISTIC OF THE WEEK
Following a brief cooling off period, the oil price rallied once again as a giant container ship – almost as long as the Empire State Building is tall – ran aground in the Suez Canal. The blockage is holding up around $9.6bn worth of goods a day. More than 300 ships are stuck on either side of the blockage and some vessels have had to reroute around Africa.
The pandemic itself was already exposing vulnerabilities in global supply chains. Container shipping rates have more than tripled as companies that control shipping lines took out capacity in expectation of falling demand. Now it costs about $4,000 to ship a 40-ft container between east Asia and the US west coast, up from $1,500 at the start of 2020
COMPANY NEWS
- Halma highlighted the resilience of its business upping its guidance on Wednesday, stating that pre-tax profits for the year to March would be the same as the previous year’s £267m
- Richemont shares finished the week higher on rumours of a takeover by Kering
- Kansas City Southern, the smallest of the seven Class 1 railway operators in the US, agreed to be taken over by Canadian Pacific
FUND NEWS
The polarisation of Covid-19 “winners” versus stocks that should benefit from the reopening of the economy is pretty evident in the property sector with meds (hospitals) and sheds (logistics warehouses) having outperformed their office and retail park peers. Yet, unlike some sectors (travel etc), the recovery in the latter has still not really caught on. Take Secure Income REIT and Yew Grove REIT, both of whom are collecting 100% of their rents again, yet still sit on meaningful discounts to NAV (or NTA) as investors question whether a “reopening” of the economy will lead to “re-commuting”, “re-business travel” and “re-officing”. We look forward to seeing how the experienced management teams of these two funds update the market over the coming months.
THIS WEEK IN HISTORY
1954: the London gold market reopens for the first time since 1929 at $35 an ounce
2009: in an early sign of the swift actions taken to repair the US banking system after the Great Financial Crisis, the Obama administration unveils plans to set up a $1tn fund for US banks to offload bad assets such as subprime mortgages
MARKET DATA
|
% returns |
1 Week |
1 Month |
1 Year |
5 Years |
|
UK Equities (% return GBP) |
-0.31 |
3.48 |
16.33 |
29.87 |
|
World Equities (% return GBP) |
0.35 |
3.86 |
33.50 |
98.67 |
|
10 Year US Treasury Yield (%) |
1.69 |
1.37 |
0.83 |
1.91 |
|
GBP / USD (fx rate) |
1.38 |
1.39 |
1.22 |
1.41 |
As at 26th March 2021. Source: Financial Express
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