Somewhat perversely, the euro rocketed in response, rising to an eight-month high against the pound and close to a two-year high against the dollar. Despite Draghi refraining from pointing to future tightening, the currency markets reacted as if he had. With the ECB now widely expected to announce in the autumn that its bond purchases will be reduced from January, investors clearly feel that winter is on its way.
(Almost) everything is awesome!
Although the euro’s late surge caused European stocks to fall back at the end of the week, most of the world’s stock markets showed little sign of slackening their pace. Major indices registered a succession of fresh highs. Plump corporate profits were a major factor in the global stock-market surge.
In the US, the Dow Jones, the S&P 500 and the Nasdaq indices all set new records. In Asia, Japan’s Topix and Hong Kong’s Hang Seng hovered around their two-year highs. The UK’s FTSE 100 index joined the party too, with the weak pound helping its overseas earning constituents and strong Chinese GDP figures boosting the share prices of its mining companies.
High tech
The NASDAQ’s record-breaking run came as a number of tech stocks continued to shrug off last month’s concerns about their eye-catching valuations. This enabled the index to not only reach new highs, but also to record 10 days of successive gains for the first time since February 2015. The FANG stocks led the charge, with all-time share-price records set by Facebook, Amazon, Netflix and Google (aka Alphabet, but FANA’s a less catchy acronym). Netflix beat expectations in its quarterly earnings and announced that it had added 5.2 million members – some 2 million more than the consensus estimate.
Nor was the tech surge limited to the US. China’s Tencent, which is listed in Hong Kong, also hit an all-time high during the week. Its Chinese internet peer Alibaba did likewise.
Searing pace
It’s not just the tech stocks themselves that are benefiting from the current vogue for the digital economy. One of the most eye-catching climbers on Wall Street this week was department store operator Sears. Its shares were up by over 20% at Thursday’s close, on news that its Kenmore appliances are to be sold through Amazon.
Directly down – and up
There was less happy news for one UK retailer, however. Sports Direct, purveyor of athletic footwear, announced in its annual results that profits had fallen by almost 60%. But investors were clearly in a mood to let bygones be bygones. After the announcement of a change in the company’s finance director, shares in the company rose by more than 13% at Thursday’s close.
And finally…
Technology may be all the rage on Wall Street, but it doesn’t always perform as planned. This week saw the sad news that a robot security guard had apparently committed suicide in Washington DC. It’s unclear whether political news or presidential tweets played any part in prompting ‘Steve’, a Knightscope security robot, to plunge headfirst into a fountain. But that’s where he was found, face down and wheels up, outside the office he was supposed to be guarding. Before we go too far in pondering cybernetic seppuku, though, we should consider a more prosaic possibility. Like the Daleks before him, Steve may simply have been unable to cope with stairs. Whatever, the truth, we hope he’s droid out now…
