Risk made a comeback this week – and we don’t mean the perennially popular, seemingly never-ending board game. Rather, investors – who recoiled as volatility struck equity markets early in 2016 – returned in their droves, pushing most indices higher. Emerging markets were near the top of the pack, trumping many of their developed market peers. The UK’s FTSE 100 index shuffled in nearer the bottom of the deck, finishing up 0.57% for the week to close on Thursday.
Better-than-expected economic data from the US, including a well-received report on manufacturing activity, contributed to the improvement in equity market performance. While a reading of 49.5 from the Institute for Supply Management’s factory index showed that the sector is still shrinking (anything below 50 indicates contraction), it was still higher than most analysts had anticipated.
A report from Eurostat revealing that deflation has returned to the Eurozone was considerably less welcome. It did, however, provoke hopes of further stimulus from the European Central Bank, and this boosted equity markets further. In a turn-up for the books, global financial stocks did particularly well. Recently, the sector has been dragged down by fears that if central banks in Europe and Japan pushed their deposit rates further into negative territory (effectively charging banks more to lodge money with them) lenders’ profits would be adversely affected. Reassurance that monetary authorities are looking into ways around this issue went some way to assuage these concerns.
Snakes and Ladders
While worldwide financials were on the up, those in the UK have (along with energy companies) lost their place as the biggest sector in the FTSE 100 index. Consumer goods – an area that includes big names such as Unilever and Burberry – has climbed to a winning position in terms of market capitalisation.
In other corporate news, losers at the, erm, Game of Life gave a boost to one rather niche area of the market. Funeral company Dignity’s profits for 2015 were up almost 23% from the previous 12 months, due to a sharp increase in the UK death rate.
Somewhat more cheerfully, Lego cemented its position as the world’s largest toymaker. The company – which earlier this year overtook Ferrari for top spot in a survey of the world’s most powerful brands – earned almost £1 billion in profits last year. The plastic brick purveyor said sales were built on the back of its Star Wars and Frozen lines.
Guess Who?
On “Super Tuesday” – one of the key dates in the convoluted US presidential selection process – both Donald Trump and Hillary Clinton came closer to monopolising their respective parties’ nominations. Mr Trump and Mrs Clinton each collected victories in seven out of the eleven states contested. Irish bookmaker PaddyPower seems confident that “the Donald” will be the Republican candidate, having already decided to pay out €120,000 to punters who bet on such an outcome.
And finally…
Residents of Salem, Oregon, were surprisingly grateful for the actions of the nanny state this week. A decision by city officials to bring a landscaping-by-goat programme for a local park to an abrupt end was widely welcomed. The capricious caprines, provided by Yoder Goat Rentals, were supposed to rid the land of invasive plants. However, the billies have now gone back to being idle. According to one un-named spokesperson, the goats devoured the park’s plants and flowers indiscriminately and cost five times as much as human gardeners. They also produced a “barnyard aroma”, he added gruffly.
