- Stock markets around the world are weak today, with the UK’s FTSE 100 index of leading shares falling by 2%, or almost £50bn this morning, Investors are spooked by the virus once more, compounded by news that the Federal Reserve in the US may be on the brink of reducing its economic support for the US economy.
- The Delta variant of the virus is threatening the reopening of economies and frets over the impact on Chinese demand in particular are hitting hard. Shares in major mining companies that supply the metals and minerals needed to help China build its cities are tumbling, after a 10% fall in the price of iron ore overnight.
- Closer to home, concerns over shortages and bottlenecks in supply chains, affecting everything from automobile manufacturing to food production are also weighing on sentiment.
- Concerns over the fundamentals have been exacerbated by news from the US Federal Reserve that it may soon reduce its efforts to prop up the economy.
FTSE 100 Performance
Commenting on the move, Steve Clayton, HL Select fund manager said:
In his book, The Dhandho Investor: The Low–Risk Value Method to High Returns, Mohnish Pabrai coined an investment approach known as "Heads I win; Tails I don't lose much." Q3 2021 hedge fund letters, conferences and more The principle behind this approach was relatively simple. Pabrai explained that he was only looking for securities with Read More
“With sentiment getting knocked it is perhaps no surprise to see defensive sectors faring best in a sea of red in the markets today. Shares in utilities and healthcare companies are holding up relatively well, but commodity and energy producers are amongst the worst hit.
If vaccinations can keep the virus from doing its worst, then confidence should improve before too long. Businesses drove a lot of costs out during the pandemic, which bodes well for future profit margins.”
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