Ritika Janiya
The FTSE 100 consists of the 100 biggest companies from the London Stock Exchange. So it had a pretty decent week by Friday afternoon with the 41-point and at 8,326. Well, for those who are curious what this means, then let’s just say it is like saying the market’s in a good state. Stocks go up, which is always cheerful news for investors.
This had mainly resulted to a growth of 1.2% during the week, mainly due to some positive news coming from China. Chinese officials announced new policies and rate cuts to help their economy grow. This brought people to greater confidence about the world economy, and most of that confidence pushed up stocks not only in China but in London as well, among others.
Leading the Pack?
Some did quite well last Friday while others did not have a really good time. British chemicals company, Croda International, led the way yesterday with a rise of 3.4 per cent in its shares. Big insurance company, Prudential, saw its share value increase too. The reasons for those increases were the positives outputting by Asia-facing companies like Prudential following reports of economic boost in China.
But nobody stormed the stock market. Shares of gold mining firm Endeavour Mining and mining firm Fresnillo fell. Fresnillo had a great week so far, rising Wednesday and Thursday on news out of China, but was closed down Friday.
Trouble brewing for Harland & Wolff
In more news, the legendary shipbuilding company Harland & Wolff has had the hardest of landings. The Shipbuilding concern that built the Titanic over one hundred years ago is now facing financial trouble. Administrators, they have brought in, saying they consider the firm insolvent.
What does that mean? Being insolvent basically means the firm does not have enough money to pay its debts. When that’s the case, administrators come in to decide what to do next. Unfortunately, this usually means redundancies, and that’s precisely what’s in store for Harland & Wolff. Out of 66 people, only a handful will get to remain at the business.
The operations of the company in Belfast, Appledore, Arnish, and Methil are out of the process of insolvency. Thus, these will be working properly. But the shareholders, the people who hold portions of the company, will not receive any funds.
Shiny Week of Gold: On Pause
The precious metal, which is seen as a safe haven for investments whenever other markets are uncertain, had a strong rally earlier in the week. It even broke its own records multiple times! However, by Friday, the gold rally slowed down as the price of gold slid a slight 0.1% to US$2,663 per ounce.
It has hit US$2,680 an ounce, which is quite astronomical. Gold also broke 26 record levels so far this year, a bigger number than it did when the world was mired in the global financial crisis of 2008.
So why do we think gold rose so sharply? There are two good reasons. For one, the US Federal Reserve reduced interest rates last week. The interest rates just came down, which means gold is more attractive to investors because they aren’t making as much money on other investments like bonds. There has also been a rising tension in the Middle East, which always makes people nervous. When people get anxious about worldwide events, they buy gold because it’s considered a “safe haven.”
David Morrison, a market analyst at Trade Nation, considers the following: “It’s interesting that gold hasn’t pulled back much yet.” This means it’s quite surprising that gold doesn’t become cheaper after such a big jump. Usually, after rising too much, the prices step back a little to stabilize themselves. The traders are tracking this process, assuming that something like a correction might occur soon.
Good Week for Chinese Markets
While London’s FTSE 100 had a good week, Chinese markets had an even better one. Indeed, this was the best week for Chinese stocks since 2008, at the height of the last global financial crisis. The government in China has been making big moves recently to help its economy, cutting rates and announcing new policies. This has made investors more optimistic about Chinese companies – and by extension, companies that do a lot of business with China.
What’s Next?
Well, moving into next week, there are a few things to be on the lookout for. Will gold continue going up or finally correct? Also, what’s going on with the FTSE 100? Is the uptrend continued into next week, or does it slow a bit?
Of course, it’s also worth watching what happens to Harland & Wolff – how many jobs lost, and anything that might be saved over time? The questions to be answered in the coming days and weeks.
