This week: Brexit looks less bleak, the FTSE 100 falls, and the S&P 500 soars.
“When a man is tired of London, he is tired of life,” said Samuel Johnson. The legendary lexicographer might have been speaking of bankers (both male and female), as comments this week indicated that reports of the City’s imminent decline appear somewhat premature.
Brexit “will not be a catastrophe” for the UK’s financial center, according to Christian Noyer, the former governor of the Bank of France appointed to represent French financial interests during the Brexit negotiations. He foresees a situation like that of 20 years ago, in which banks had most of their staff in London, but tens or even hundreds in Paris. His comments echoed those by Deutsche Bank, which said earlier in the week that it will be moving fewer staff from London to the Continent than many seem to expect.
Monsieur Noyer’s remarks formed part of a French charm offensive. UK Prime Minister Theresa May shared a Berkshire pub lunch with French President Emmanuel Macron before emerging with the news that France would be lending Britain the Bayeux Tapestry in 2022. For its part, the UK is to spend an extra £45 million (US$62.4 million) on Channel security. Opinions differed as to which leader had got the better end of the deal.
Earlier in the week, Mrs. May had to deal with more sobering stuff. Construction giant Carillion filed for compulsory liquidation on Monday. Questions have arisen over who knew what and when, and whether the government should have continued to award outsourcing contracts to the struggling company after a succession of profit warnings last year. Any thoughts that Carillion was “too big to fail” have been dashed, however, with the company’s shares being wiped out. Of more pressing concern are the fates of Carillion’s suppliers and workers, not to mention employee pensions.
Although Carillion’s collapse was one in the eye for the UK market, it was only part of the FTSE 100 Index’s woes this week. The index was down 1.0% by Thursday’s close. Luxury fashion house Burberry was among the biggest fallers, as investors reacted to disappointing third-quarter results. Shares in Pearson were also weak. The educational publisher said its U.S. sales were likely to remain depressed in 2018, and warned that operating profit would be lower than last year’s.
Stock-market news was brighter abroad. In a week truncated by the Martin Luther King Jr. Day holiday, America’s S&P 500 Index finished up 0.4% by Thursday’s close, hitting another all-time high along the way. Healthcare companies Merck and United Health were among the stronger performers, along with Boeing.
European shares made modest gains, with the FTSE World Europe (ex UK) Index up 0.1%. French supermarket operator Carrefour was among the standouts, helped by strong fourth-quarter sales and a move into online fashion retail. Meanwhile, German microchip-maker Infineon boosted a buoyant technology sector. Investors are growing increasingly excited about the prospects for driverless cars, with Infineon seen as a prominent beneficiary of the trend.
When on tour in the 1980s, rock giants Van Halen used to make a specific request in their contracts for a bowl of M&Ms with all the brown ones removed. This wasn’t because of any particular objection to the unassuming chocolates, but to reassure the band that their requirements had been properly read – including those for on-stage safety. Recently, Australian traveler Patrick Feary has begun to employ a similarly cunning technique aimed at eliciting personalized service from hotel chains.
But rather than specifying sweetshop particulars, Feary is requesting representations of radioactive reptiles. Feary, who travels the world for his work with hospitality startup Hotelchamp, asks staff in hotels to furnish him with a drawing of Godzilla.
To his surprise, several have obliged. One Massachusetts hotel even met his request for a depiction of “Godzilla firing a bow and arrow at an apple on top of the head of a smaller Godzilla, William Tell style” – and threw in a bottle of wine and a fruit bowl too!
If you don’t ask, you don’t get…
Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks are enhanced in emerging markets countries.
Companies mentioned are for illustrative purposes only and are not intended to be a recommendation to buy or sell any security.
Indexes are unmanaged and are included for illustrative purposes only. You cannot invest directly in an index.
Editorial image credit: Science History Images / Alamy Stock Photo