What's next for UK equities?
Head of Equity Strategy
Summary: Brexit is hogging the headlines when it comes to UK assets, and deservedly so given the volatility involved. From a longer-term perspective, however, there are multiple reasons to favour UK stocks over their global counterparts.
The big fight is on: Epic Games sues Google and Apple on Fortnite removal
Epic Games, the gaming developer behind Fortnite, has launched a direct attack on Apple and Google suing the companies after Fortnite has been removed from the App Store and Google Play following Epic Games decision to launch a different payment option and providing a discount to its users.
Labour market a key to recovery
In the Aussie trade, it was all about the ongoing earnings reports and labour market data for July which highlights the long road to recovery for both the economy and the workforce, even though the headline unemployment rate beat economist's estimates.
Q2 earnings were worse than expected but investors are pricing a ‘new world’
Earnings were bad in Q2 and worse than expected six weeks ago although the provided outlooks have improved and bolstered forward earnings expectations. It is clear from dividend futures that the market expect companies to rebound in terms of earnings but lower the payout ratio to either repay debt or invest in growth. Either way, our view is that investors have overlooked bad macro and earnings as they are pricing in a 'new world' of lower yields for longer but still high growth in certain areas of the economy which will drive bond proxy pricing in equities and accelerate equity concentration.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)