FTSE rising whilst prospect of FTA seems to be fading

dunroving

I was first introduced to investing in January 2000, and the tech crash was a painful early lesson. 
The current general behaviour of the stock market reminds me of this, and other crashes/major corrections since. Today's news that the share price of airbnb has doubled on its first day certainly smacks of "irrational exuberance", to quote Alan Greenspan.
One factor that wasn't present in all previous frothy market eras is that cash savings rates are absolutely pathetic - is it possible that it's new investors who were previously in savings accounts who are propping up the current investment market?

Albermarle

dunroving said:

I was first introduced to investing in January 2000, and the tech crash was a painful early lesson. 
The current general behaviour of the stock market reminds me of this, and other crashes/major corrections since. Today's news that the share price of airbnb has doubled on its first day certainly smacks of "irrational exuberance", to quote Alan Greenspan.
One factor that wasn't present in all previous frothy market eras is that cash savings rates are absolutely pathetic - is it possible that it's new investors who were previously in savings accounts who are propping up the current investment market?

Apparently day traders are part of the reason the US tech stocks seem to be getting a bit overvalued . 

Linton

dunroving said:

I was first introduced to investing in January 2000, and the tech crash was a painful early lesson. 
The current general behaviour of the stock market reminds me of this, and other crashes/major corrections since. Today's news that the share price of airbnb has doubled on its first day certainly smacks of "irrational exuberance", to quote Alan Greenspan.
One factor that wasn't present in all previous frothy market eras is that cash savings rates are absolutely pathetic - is it possible that it's new investors who were previously in savings accounts who are propping up the current investment market?

I suspect it is new investors after a quick buck rather than potential committed long term share holders.  But not because of savings interest which may not have interested them anyway, more because the internet has made share trading available to everyone.   Plus people have a greater awareness of investing because of pensions. 

Sally57

If there is no FTA over the weekend deadline and sterling takes a tumble thus will only benefit some if the major companies in the FTSE100 ( such as Unilever, GSK, Diageo etc) as they do better when we have a weaker pound.

Thrugelmir

Sally57 said:

If there is no FTA over the weekend deadline and sterling takes a tumble thus will only benefit some if the major companies in the FTSE100 ( such as Unilever, GSK, Diageo etc) as they do better when we have a weaker pound.

There's a universe of companies listed on the London markets. Not just the majors that receive an earnings boost. 

John464

0779mike said:

The prospect of a Free Trade Agreement between the UK and the EU seems to be diminishing daily but the FTSE seems to disregard this and continues to rise.
Why is this happening ?  

The big spenders hire politicians to get the inside story.
Wheras we hear what they choose to put out to the media.
So the only way we can reliably get our share is to ignore it,
and stay invested through all the ups and downs.

MPN

Sally57 said:

If there is no FTA over the weekend deadline and sterling takes a tumble thus will only benefit some if the major companies in the FTSE100 ( such as Unilever, GSK, Diageo etc) as they do better when we have a weaker pound.

AstraZeneca reports in dollars so I’m sure they would benefit from a weaker pound - not so sure about GSK - don’t they report in sterling?

Thrugelmir

MPN said:

Sally57 said:

If there is no FTA over the weekend deadline and sterling takes a tumble thus will only benefit some if the major companies in the FTSE100 ( such as Unilever, GSK, Diageo etc) as they do better when we have a weaker pound.

AstraZeneca reports in dollars so I’m sure they would benefit from a weaker pound - not so sure about GSK - don’t they report in sterling?

AZ declares dividends in US$. As do HSBC, Experian, Polymetal, Ferguson, Rio Tinto, Mondi, Antofagasta and BP to name a few others. Shell declares in €. 

MPN

Thrugelmir said:

MPN said:

Sally57 said:

If there is no FTA over the weekend deadline and sterling takes a tumble thus will only benefit some if the major companies in the FTSE100 ( such as Unilever, GSK, Diageo etc) as they do better when we have a weaker pound.

AstraZeneca reports in dollars so I’m sure they would benefit from a weaker pound - not so sure about GSK - don’t they report in sterling?

AZ declares dividends in US$. As do HSBC, Experian, Polymetal, Ferguson, Rio Tinto, Mondi, Antofagasta and BP to name a few others. Shell declares in €. 

Thrugelmir said:

MPN said:

Sally57 said:

If there is no FTA over the weekend deadline and sterling takes a tumble thus will only benefit some if the major companies in the FTSE100 ( such as Unilever, GSK, Diageo etc) as they do better when we have a weaker pound.

AstraZeneca reports in dollars so I’m sure they would benefit from a weaker pound - not so sure about GSK - don’t they report in sterling?

AZ declares dividends in US$. As do HSBC, Experian, Polymetal, Ferguson, Rio Tinto, Mondi, Antofagasta and BP to name a few others. Shell declares in €. 

Thanks for that, however my point was unlike AZ I don’t think GSK will benefit from a weaker pound as I believe they declare in £?

bowlhead99

MPN said:

Thrugelmir said:

MPN said:

Sally57 said:

If there is no FTA over the weekend deadline and sterling takes a tumble thus will only benefit some if the major companies in the FTSE100 ( such as Unilever, GSK, Diageo etc) as they do better when we have a weaker pound.

AstraZeneca reports in dollars so I’m sure they would benefit from a weaker pound - not so sure about GSK - don’t they report in sterling?

AZ declares dividends in US$. As do HSBC, Experian, Polymetal, Ferguson, Rio Tinto, Mondi, Antofagasta and BP to name a few others. Shell declares in €. 

Thrugelmir said:

MPN said:

Sally57 said:

If there is no FTA over the weekend deadline and sterling takes a tumble thus will only benefit some if the major companies in the FTSE100 ( such as Unilever, GSK, Diageo etc) as they do better when we have a weaker pound.

AstraZeneca reports in dollars so I’m sure they would benefit from a weaker pound - not so sure about GSK - don’t they report in sterling?

AZ declares dividends in US$. As do HSBC, Experian, Polymetal, Ferguson, Rio Tinto, Mondi, Antofagasta and BP to name a few others. Shell declares in €. 

Thanks for that, however my point was unlike AZ I don’t think GSK will benefit from a weaker pound as I believe they declare in £?

It doesn't matter what they 'declare in'.  They may choose to say their global revenue for 2019 was £34bn or $44bn.  But it is global revenue and mostly earned in other countries, so if they still bring in $44m the next year and the pound is weaker - meaning pounds are relatively worthless and dollars buy more pounds - they have brought in more pounds of value (e.g. £34bn might be £40bn with the exact same dollar revenue). 

If fx rates mean they are earning x% more pounds in revenue (and spending x% more pounds in cost) the difference between the two is x% more pounds in profit. What people will pay for a share of a company in pounds is based on what they think of the prospects are for the value of the company's assets and its profits, in pounds. 

They earn in a variety of currencies, so looking at some old slide from a couple of years ago they mentioned that if the dollar sterling rate average for the full year changed by 10 cents their earnings per share in pounds would change by ~4.5% ; if euro sterling rate changed by 10 cents the EPS would change by ~2%; yen sterling rate changed by 10 yen the EPS would change by ~1%, etc.  If all of those countries' currencies are stronger there is simply more profit when you count up the pounds of profit they have made. This impacts both how many pounds of dividends they will be willing to pay you, and what the market will think of how much it wants to pay for a share of the company that you own and might want to sell.