D-PIMS Weekly Market Update - Week of 8th to 14th August 2022
Today’s Monday update:
Over the course of last week, market moving headlines were mostly related to economic geopolitical matters:
• On Monday, China's military announced fresh military drills on Monday in the seas and airspace around Taiwan - a day after the scheduled end of its largest ever exercises to protest against last week's visit to Taipei by U.S. House Speaker Nancy Pelosi.
China search engine giant Baidu Inc said on Monday it has obtained permits to operate fully driverless robotaxi services on open roads from two Chinese cities, the first of their kind in the country. The permits, awarded by the southwestern municipality of Chongqing and the central city of Wuhan, allow commercial robotaxis to offer rides to the public without human safety drivers in the car.
Two more ships, carrying corn and soybeans, departed from Ukrainian Black Sea ports on Monday, Turkey and Ukraine said, taking the total to ten since the first ship sailed last week under a deal with Russia to unblock Ukrainian grain exports.
• On Wednesday, China's military said it has "completed various tasks" around Taiwan but will conduct regular patrols, potentially signalling an end to days of war games but also that Beijing will keep up the pressure against the island.
As energy bills mount and the threat of rationing increases, some European retailers are turning off lights and considering shorter opening hours this winter. Energy bosses and government officials have urged people and businesses to reduce power use and put in place contingency plans, so they are less reliant on gas imports if there are shortages linked to the war in Ukraine. The Austrian branch of multinational retail chain SPAR Group is reducing the hours of lighting for storefront advertising and outside its more than 1,500 stores across the country, a spokesperson said in an email.
U.S. consumer prices are expected to have risen at a much slower pace in July due to a sharp drop in the cost of gasoline, delivering the first notable sign of relief for Americans who have watched inflation climb over the past two years. The Consumer Price Index (CPI) likely rose 0.2% last month after advancing 1.3% in June, according to economists polled by Reuters ahead of the release of the closely watched Labour Department report on Wednesday.
• On Friday, Britain's economy contracted by less than feared in June, when public holidays had been expected to exert a big drag, although sectors most exposed to a worsening cost of living crisis, like retail and restaurants, struggled. The Office for National Statistics said gross domestic product (GDP) fell by 0.6% in June, the biggest contraction since January 2021 but less severe than the 1.3% drop predicted by a Reuters poll of economists.
Large corporations are jumping on the "green" bandwagon left and right, which in turn is pushing firms that lease and manage car fleets to convert to electric vehicles (EVs) faster than they had ever thought possible. In late 2020, fleet management company ALD set a target to have 30% of its new cars electrified by 2025, but leasing giant, a unit of Societe Generale, past that target in 2021. ALD has set a new goal that around 50% of its new vehicles will be either EVs or hybrid models by 2025. Corporations' hunger for zero-emission options to meet ESG targets keeps growing, Deputy Chief Executive Officer John Saffrett told Reuters. Firms like ALD - which replaces its entire fleet every 42 months - play an important role in the auto industry, buying millions of vehicles globally that also help shape the future of the used car market when they come off lease.
• Over the week, the main global stock markets were mostly up, with the US faring the best and Germany the worst. Over the week, all the D-PIMS portfolios had another strong positive week. The Portfolios were helped by their Natural Resources and US value and smaller company holdings.
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