Should have sold in May?
World stock markets paused and drifted downward as worries about the bond markets dominated market sentiment. News that China’s exports were flagging added to the pressure. But oil and gold held firm.
Greece’s relationship with the European Union and IMF took a turn for the worse, as PM Alexis Tsipras roundly rejected a plan proposed by RU Commission president Jean-Claude Juncker. Although Athens got an agreement to postpone a €300 million May payment to the IMF until end-June, its line continued to be that a failure to concede a general loan haircut would mean “the beginning of the end” for the Eurozone.
Hold on, there cowboy
The IMF cut its GDP growth forecast for the US economy in 2015 from 3.1% to 2.5%, citing what it called “significant uncertainties as to the future resilience of economic growth”. In particular, the IMF feared that the Fed’s plan to raise bank rates might cause problems. “There is a strong case for waiting to raise rates until there are more tangible signs of wage or price inflation than are currently evident.”
Global economic growth in 2015 was also downgraded by the OECD, from 3.7% last November to just 3.1%. The first quarter of 2015, it said, had been the weakest since the 2008 financial crisis.
There was better news from Japan, where first quarter economic growth was retrospectively revised from 0.6% to 1.0%. The change leaves Japan’s growth up by 3.9% on an annualised basis, compared to a preliminary reading of 2.4%. The change was attributed to a rapid growth in business spending.
Bitcoins plateaued at around $225 between April and early June, Meanwhile a report from card provider MasterCard declared that the risks presented by digital currencies far outweighed the benefits, not least because “on average it takes 10 minutes for a block to be verified” – and “that digital currencies are far more susceptible to hacking attacks.”
China banned smoking in public places such as shops, offices, buses and restaurants. But suppliers to the world’s biggest tobacco market can relax in the thought that having a puff in the street is still allowed.
Better than a pension?
House prices in Britain have sextupled in 30 years, according to the Halifax. An 8.6% price rise over the past year has taken the average home price to £196,067 in May, compared with £35,623 in 1985.
HSBC announced a plan to cut 8,000 UK jobs, a loss of about one job in six, as pressure mounted for cost savings. But globally, about 10% of the bank’s 255,000 employees are to be shed, mainly through natural attrition, the bank said. Meanwhile, HSBC is preparing to separate its retail banking and investment arms, as required by law. It is also expected to decide on a possible change of HQ out of the UK by December.
Good news, bad news
The UK trade deficit shrank to just £1.2 billion in April, from £3.1 billion in March, according to new data from the Office for National Statistics. But it wasn’t a simple story, because a £8.6 billion deficit on goods had been largely offset by an estimated £7.4 billion surplus on services.
Transact became the first UK platform provider to offer venture capital trusts directly, following the introduction of new legislation that removes the cumbersome need for VCTs to be first bought by consumers and then moved to a platform. The new project, under which VCTs can be bought in a nominee capacity while still qualifying for tax relief, is in collaboration with Octopus Investments.
China’s richest man, Li Hejun, lost around half of his $30 billion wealth in 30 minutes as the stock price of his company, Hanergy Thin Film Power Group, fell victim to a sudden panic – apparently because he failed to turn up to the company’s annual meeting. But it could have been worse: Dingxiang Loeng, another billionaire was rumoured last year to have been killed by a rogue champagne cork.