U.K. Falls into largest Recession on record but stocks up? More virus vaccines and Electric TSLA!
A recession is classed as two consecutive quarters of negative growth in its Gross Domestic Product (GDP) and Q1 was previously reported as minus 2.2% so with Q2 reporting a drop of a staggering 20.4% it means that the U.K economy has entered a recession for the first time in 11 years. This is the largest quarterly contraction since records began in 1955 and although a decline was widely expected, it was the magnitude of the fall that surprised. Yet as we have come to see in recent times, bad news can be perceived as good, with the FTSE finishing the day up 125 points at 6280, shrugging off the recession fears with traders expecting further stimulus to support the market along with a bumper 22 point dividend up for grabs.
Virus dampens mood
Fed policy makers muted the days market rally with a reality check that the economic slowdown will continue until the U.S. gets a hold of the pandemic. Two federal reserve policy makers stated that this will last for the rest of the year at least and Americans will need to learn to live with it. They went on to say that consumer spending is to remain weak and uncertainty will continue through Summer, Fall and into Winter. This news, although sobering has acted as a catalyst for further stimulus in recent times, hence our “Nikeswoosh” recovery thus far and with tech stocks still in demand it is not all doom and gloom.
TSLA timely stock split
Wall street analysts praised Tesla Inc’s move to split its highly priced stock as it would allay fears of its recent 200% rally which was potentially causing the stock to be too expensive for retail traders to hold. The 5 for 1 split comes at a time where many young investors are getting into trading for the first time and a cheaper stock price is viewed as being more attractive for the younger generation to get onboard with.
First Russia, now Germany
Russia yesterday stated that they “had a vaccine” and now Germany’s leading infectious disease institute says the first vaccine could be available as early as Autumn. German biotech firm BioNtech is working with U.S Pharma giant Pfizer on a vaccine and is aiming to file for emergency approval as early as October so although not ready today as Russia intimated, it could be a more realistic timeframe to help towards calming the pandemic.
Quote of the day: “Success is walking from failure to failure with no loss of enthusiasm”Winston Churchill
TSLA: It was a day for the bulls where many of the household names could have taken the coveted Biggest Bull title, with a host of tech stocks competing such as Amazon, Apple and Netflix, all rising over 2.5% on the day. But at the time of writing, Tesla was at its highs of plus 12% on the day after the stock split was perceived to be a clever move to drive further growth appetite, pun intended.
GBPEUR: With Gold, Bitcoin and Major Indices all enjoying gains today it is Sterling who falls foul of Tradeviews Biggest Bear as it fell in value against almost all other currencies today on the back of the recession news. You could take your pick but GBPEUR was our choice after dropping over half a percent to 1.1045 before finding support there at its recent lows for the week and where it has reacted well from thus far.