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“Well that didn’t last too long. After getting into a lather about the accelerated timetable for potential interest rate hikes announced by the US Federal Reserve last week, markets seem to have regained their poise,” says AJ Bell Investment Director Russ Mould.
“The catalyst seemed to be messaging from Fed officials which softened the hawkish tone of last Wednesday’s meeting, plus also a realisation that any rate increases are still two years away.
“US stocks rallied hard on Monday and Japan’s Nikkei 225 produced a notable comeback on Tuesday, with the FTSE consolidating its position above 7,000 once more.
“Meanwhile the dollar fell overnight and yields on long-term bonds were rising once again, leaving the past few days’ volatility looking like a brief hiccup rather than a major speed bump for markets.
“Oil prices are on the march once more on supply concerns, helping to lift index heavyweights BP and Royal Dutch Shell and fuelling the FTSE’s rise.
“Commercial property landlords British Land and Land Securities were also up strongly on recovery hopes as the former confirmed plans to commence construction on a new tower block in east London.”
Aston Martin
“For a business that has generally disappointed since it joined the stock market in 2018, Aston Martin’s chaotic journey now takes a new direction with a legal dispute. The upshot is that the car maker is severing ties with two Swiss dealerships, it has scrapped a royalty deal and it is no longer using third parties to take deposits for special vehicles.
“This causes a short-term hit to its earnings and cash flow which means Aston Martin once again disappoints on the financial front. But longer term there could be financial benefits if Aston Martin no longer hands out royalty payments for certain orders including the Valkyrie model made through one of the Swiss dealers, Nebula Project, which had helped to finance the development of the models.
“While investors may welcome Aston Martin taking decisive action to reclaim money that hasn’t been paid to it on car sales, the royalty component is likely to be hard fought in the courts, particularly as Nebula Project had stepped in to help with the financing at a time when the car maker was going through a very bad patch financially.
“One can only speculate, but Nebula may well try and seek alternative compensation if it cannot earn royalties in the future, perhaps arguing that it played a crucial supporting role to help Aston Martin during one of its darkest hours.
“Last month it looked as if Aston Martin was starting to find its feet again as wholesale volumes picked up, leading the business to say it was making the first steps towards improving profitability. It has been clearing stock from dealerships to balance supply and demand, and its DBX SUV model has been a welcome hit for the business.
“Nevertheless, investors who signed up in the hope of profiting from owning shares in one of the world’s most famous car brands have yet to experience anything close to what could be considered normal for a business, namely successive sales and profit growth.”
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