One of China’s major indices, the Shanghai Composite, experienced a sell-off last week, bordering in correction territory as the relationship between the US and China continues to be strained. China’s central bank, The People’s Bank of China, has increased liquidity not only for fears of a trade war, but as the economic outlook in China weakens. Added to this, is a weakening currency in China, which has reached its lowest level in 6 months, and the health of the Chinese markets is not looking so positive. There is speculation that the central bankers in China are purposefully weakening their currency to harm US imports. For the month of June, Chinese Renminbi experienced its greatest ever monthly fall against the dollar.
At least 5 of the major carbon dioxide factories across Europe and the UK have simultaneously shut down production for maintenance, during a period of peak demand, raising concerns around the impacts on businesses. As the summer intensifies and sporting events keep the country gripped, the demand for beer and other carbonated drinks is elevated and the supply is tightening. Booker, Tesco owned cash and carry, has started to limit beer sales as supply has restricted. Another industry which has also started to suffer is farming; CO2 is used in meat packaging to lengthen its shelf life and to stun animals before slaughter. Whilst the impacts are currently minimal to consumers, and supply is expected to return to normal in early July, there are no doubts that this will have affected businesses in these industries, with smaller businesses expecting a greater blow.
The Office for National Statistics (ONS) released upgraded growth figures for the first quarter last week, which were 0.2% rather than the estimated 0.1%. It is thought that these better figures are based on a change in the way the ONS measure the construction sector. Based on this better than expected growth, sterling appreciated against the dollar as investors’ expectations of a further rate rise in August grow again.
Looking to the week ahead, the prime minister, Theresa May, and other senior ministers are meeting at Chequers to discuss Brexit and a possible customs deal. There are reports that there is an alternative customs model to be discussed at the summit, but no further details have been given at this stage.
Speaking of mountains, a team from Beaufort Investment has been doing the National Three Peaks Challenge this weekend to raise money for Dreams Come True. If you would like to sponsor the team please visit: https://uk.virginmoneygiving.com/fund/beaufortgroup