There is a lot happening in the global landscape that is defining the trends among investors around the world. The most recent to tap on would be the rising fears of US-China trade tensions due to Beijing’s move to clamp down on Hong Kong that would end ‘one country, two systems.’ Further, the clinical researches on coronavirus vacancies, easing of lockdowns and forecast of a worst-ever recession coming from different international bodies are the top stories scrolling the news headlines.
But amidst all the chaos, are you missing some important trends? If yes, let us help you with the latest trends in gold, bitcoin and FTSE 100 stocks.
‘History repeats itself’- A quite common principle in stock trading seems to be true in the ongoing pandemic turmoil where investors have quickly turned their tables to a safe haven in the times of crisis. The actions are broadly driven with the inverse correlation between the financial market and the yellow metal. As demonstrated in history and technically explained, price of gold rises when the stock market falls. Ideally, this should be the case given the steep crash in the financial market on the onset of the pandemic.
But no, gold had some other plans to surprise the market. It means the gold prices started mirroring the price action of the stock market to join the bloodbath for quite some time. However, it was later revealed that downside momentum in gold prices was due to the investors pulling out their money from gold to meet the margin calls.
Overall, the gold has performed the way it was meant to perform. It has been on the upward trajectory to register the growth of 13.71 per cent in Spot US Dollar (XAU/USD) since the start of this year. Many avid investors have also been keenly eyeing the gold stocks due to their direct exposure to precious metals and gold prices. Some famous gold stocks on London Stock Exchange include Centamin Plc (LON: CEY), Highland Gold Mining Limited (LON: HGM), Greatland Gold Plc (LON: GGP), and Petropavlovsk Plc (LON: POG), among others.
Bitcoin prices are on the rebound after bottoming out on the halving day, May 12. The day marked the third block reward since the inception of bitcoin blockchain in 2009 that reduced the reward to miners for every block to half, to stand at 6.25 coins per block in comparison to the previous reward value of 12.5 coins per block.
As anticipated by industry experts, bitcoin prices have surged post the halving process that aims to keep a check on the bitcoin supply over time. Bitcoin prices have recently formed the peaks at USD 9,793 (May 14) and USD 9787.65 (May 19) before sliding to USD 8838.01 as on May 26 (2:05 PM GMT).
Bitcoin is a digital currency and one of the most innovative and earliest forms of cryptocurrency that is based on the foundation of peer-to-peer technology. It is often considered as an alternative to gold investment by the investors who are looking for a scarce source of investment. After a bitcoin bubble in 2018, investors gained confidence in 2019 that led to a rise of over 92 per cent in bitcoin prices in that year. However, bitcoin also involves a high degree of risk as this transaction system does not include any central authority or banks and can thus lead to inherent price volatility, risk of hacks, scams and other vulnerable threats.
FTSE 100 Stocks
Coronavirus pandemic has hammered the global financial market to swing through a free fall in mid-March before recently showing a rebound to assuage nervous investors. London’s benchmark index FTSE 100, like other global indices, has dropped sharply on the looming fears of a recession. And now comes the US-China trade tensions!
FTSE 100 has slipped from 6,654.90 on March 2 to 6,065.69 as on May 26 after many dribs and drabs recorded over the last three months. It led to days of sharp decline during which blue-chips stocks were trading at dirt-cheap prices and the trading halted in many instances. However, now the markets are showing slight recovery apparently on the positive nudge of lockdown easing that is taking place in the United Kingdom through a phased exit strategy.
On May 26, FTSE 100 index opened in green after settling below 6,000 on Friday. It is currently up 76.70 points to trade at 6,069.98 as at 11:43 AM GMT. Let’s discuss three FTSE 100 stocks that are trading in green.
Associated British Foods PLC (LON: ABF)
Commonly named as A.B. Food, Associated British Foods is an international food production and retail company. The group recently released encouraging trading performance for the first half ended 29 February 2020 with the growth of 2 percent in its interim revenue to £7,646 million. However, the sudden closure of Primark stores has been a major challenge to the group to mitigate the cash flow, manage inventories in transit and maintain profit due to loss of sale.
ABF stock has gained over 146 points or 8.72 per cent to trade at GBX 1,826, in the day-trading session on Tuesday, May 26 (12:51 PM GMT).
Carnival PLC (LON: CCL)
The British owner of hotels, luxury resorts and cruise lines, Carnival Plc, completed successful financing last month that led to a heavily oversubscribed offering of senior convertible notes, senior secured notes, and stocks, netting $6.4 billion of additional liquidity. However, the company is currently engaged in bringing down its cost through a combination of layoffs, furloughs, reduced workweeks and salary reductions, given the deepening impact of the pandemic on the leisure sector.
The stock has been badly beaten down in the coronavirus fallout due to the universe of leisure business it belongs to. In turn, it provided investors with the rare opportunity to basket the stock of GBP 8.65 billion worth company at a dirt-cheap price. The stock of Carnival Plc has surged by 11.25 per cent to trade at GBX 1,092 as on 26 May 2020 (12:47 PM GMT). At the last traded price, CCL stock was offering a massive dividend yield of 16.19 per cent, building confidence among investors.
EasyJet PLC (LON: EZJ)
EasyJet is the United Kingdom-based airline company that operates over 330 aircraft across ~34 countries. Since countries have imposed a travel ban and border restrictions to contain the spread of coronavirus pandemic, airline sector has been deeply impacted with, in a situation where the airlines did not even have enough passengers to reach the break-even.
But now the 2nd largest British airline seems to be coming back on track, as Prime Minister Boris Johnson has initiated a lockdown easing plan. The positive market sentiments have added much-needed impetus in the sector, further giving hopes of early economic revival.
EasyJet stock is trading at GBX 647.80, up 16.22 per cent or GBX 90.40, as on May 26 (12:47 PM GMT).
The high degree of uncertainty hovering around the pandemic has glued investors to their screens to stay abreast with the latest updates, as any change or development in the global economy could potentially turnaround the game to squeeze them out of the market. Right now, developments around the US-China trade tensions could be the key driving factors in addition to the UK government’s new Project Birch and exit strategy success.
With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities.
Amidst this, are you getting worried about these falling interest rates and wondering where to put your money?
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