The week in IR: From Woodford’s ills to issues of a Sanders presidency
At the start of the week, Neil Woodford’s Patient Capital Trust, a constituent of London’s FTSE 250 Index, fell as much as 20 percent in early trading before closing 7.2 percent lower at 71p a share, reported The Guardian. Investors were shocked by news on Monday that the UK’s most famous fund manager had suspended trading in his Equity Income Fund so that thousands of investors could not take out their money for at least 28 days. By the end of the week the Financial Times reported that investors had abandoned his funds in droves.
European shares fell on Tuesday as the first US antitrust action against Google and other major technology companies drove down equivalent companies in Europe, following losses on Wall Street and in Asian markets, reported Reuters.
US President Donald Trump’s tariffs could reverse the benefits of any tax cuts, completely clouding the US economic picture, reported The New York Times. And Bloomberg reported a warning from JPMorgan that US stocks could be hit even worse than anticipated due to the tariffs.
On Wednesday it was reported by The Telegraph that Royal Dutch Shell promised to hand back $125 bn (£100 bn) to shareholders between 2021 and 2025 through dividends or share buybacks.
Tech stocks’ days of wonder are over, according to Iowa-based Principal Global Investors’ Seema Shah, who manages $442 bn, reported Bloomberg.
Russia embraced the Chinese telecommunications giant Huawei to develop part of its wireless technology, after the tech firm was ostracized by President Trump, reported the NYT. Later in the week, Ian Levy, technical director of the UK’s National Cyber Security Center, warned that the Chinese company needs to raise its ‘shoddy’ security standards, which, he said, falls below rivals’, reported The Guardian.
On Thursday, CNBC reported that the global head of sovereign ratings at Fitch said he feared the US-China trade dispute will not be resolved soon.
Citigroup revealed it was bullish on Australian stocks, which it said had defied a sluggish economy to rally this year, with further opportunity to keep going on an upward trajectory, according to Bloomberg.
US employers put hiring on something of a hold in May, adding just 75,000 jobs – well below the 180,000 expected – indicating that companies are taking a more restrained approach at a time of potentially slowing global growth and continuing trade tensions, according to the WSJ.
On Friday, Reuters reported that the FTSE 100 was heading for its fifth day of gains with sharp rises in Shell and BP shares.
Elsewhere, billionaire hedge fund manager Stanley Druckenmiller warned that stocks on US markets would fall by 30 percent to 40 percent if Democrat Bernie Sanders is elected US president, reported CNBC.