Major Indices
| Index | Performance |
|---|---|
| S&P 500 | -2.11% |
| DOW Jones | -2.58% |
| NASDAQ | -2.22% |
| FTSE 100 | -3.48% |
| DAX | -1.63% |
| Nikkei 225 | -3.15% |
| Shangai Composite | -1.8% |
Sector Performance
AMC
AMC shares fell 35.55% on Monday, whilst preferred shares grew 16%. Late on Friday, it was revealed that preferred shares wold become common shares. Preferred shares have priority over common ones for dividend payments (which are also usually pre-determined and miss out on periods of growth/decline). Despite being entitled to income last in the event of liquidation, original shares have voting rights. This means a dilution for shareholders (less company ownership). On top of this, there is a plan to undergo a 10-1 stock split which will drive up share price (but generally not value).
US Producer Price Index (PPI)
US PPI (Producer Price Index) increased 0.3% over July (slightly higher than expected). Consumers continue to spend money, driving up demand, prices of materials and transportation, and therefore product prices which adds to the vicious cycle of inflation. It is still expected that the FED will leave rates alone at the next meeting on 19-20 September. "The economy still faces some inflationary pressure from rapidly rising wages, but the cooldown of business input costs should help keep consumer prices on a downward trajectory in the fall," said Bill Adams, chief economist at Comerica Bank in Dallas.
US PPI
UBS Shares Surge
UBS stocks have rose 7.18% so far this August to $23.43, the highest since 2008. After acquiring Credit Suisse for $3.2bn, the forecast seems to be looking bright.
UBS Shares Since The Year 2005
Italy Tax Introduction On Banks
Last Tuesday the Italian far-right government led by Minister Meloni announced that they will impose a 40% windfall tax on bank profits. Italian lenders have been thriving off of higher interest rates on their loans whilst ordinary people struggle to keep up. This is expected to win support from the public and generate £1.7bn to fund families, help mortgage holders and cut taxes. The government targeted the ECB as opposed to the banks themselves during a press conference on Monday. Italian banks however of course said that this will kill the sector, whilst Intensa Sanpaolo and UniCredit dropped by 8% and 6.5% respectively. Italy now have 60 days to pass the law.
FOMC Meeting Minutes
In response to the minutes, equities responded badly and chances of another 0.25% hike increased, though are still less likely than no hike.Here are the key takeaways...
- The FED would need more data to suggest that total demand and supply were balancing (by decreasing demand and growing supply) before they can be confident on falling inflation.
- The majority saw the minutes as indication of the need for further tightening of monetary policy to tackle inflation.
- It does not seem that the FED have been making confident rate decisions, and they don't see them becoming straight forward in the future.
- Eyes turn to US Jobless claims data for the week to 12th August, which is expected to be 240,000
Other Headlines
- US 10 Year Treasury Yields reach highest level since 2008
- US advance retail sales show a 0.7% monthly growth, pointing to strong consumer spending and raising more inflation concerns
- Wealth manager Zhongzhi Enterprise Group is experiencing a liquidity crisis and will be restructuring debt, leaving exposure to China's fragile property market
- BAE Systems traded lower on the news of the acquisition Ball Aerospace for $5.55 billion