Week in review: winter wipeout

As the tinsel went up this week, the world’s stock markets went down. The gains made at the end of November were swiftly erased as global equity indices resumed their downward trend with a vengeance.

Most of the themes that drove the downturn were all too familiar. In the UK, the government’s Brexit plans were plunged into further disarray. And hopes of a resolution to the US-China trade war, which rose after warm words at the weekend’s G20 summit, were dashed. The respite, it appeared, was just for Christmas (and Chinese New Year), not for life.

Then there was the oil price. After dipping below $60 a barrel on Thursday, Brent crude finished the day around that level. This is well below the $66 at which it entered 2018. The declines occurred as it was reported that the US is now a net exporter of oil for the first time in 75 years – the result of booming domestic shale production.

Huawei in some danger …

Relations between China and the US took on an even chillier tone on Wednesday, when Meng Wanzhou, the chief financial officer of Chinese telecoms giant Huawei, was arrested in Canada.

Meng, who is the daughter of Huawei’s founder, is now facing extradition to the US. This is reportedly in connection with charges related to US sanctions on Iran. The US security adviser John Bolton also mentioned alleged violations of intellectual property rights by Huawei when discussing the case, although he gave no details of any charges that Meng may face. The Chinese government has demanded her release.

The arrest was not the only problem Huawei faced during the week. In the UK, BT announced that it was removing the company’s components from its 3G and 4G networks, citing security concerns. By the end of the week, Huawei appeared to have agreed to a series of stipulations by Britain’s National Cyber Security Centre in a bid to remain involved in the construction of the country’s 5G network.

These demands centred on the use of third-party code, which could leave the network vulnerable to hackers, but there are also concerns about Huawei’s links to the Chinese authorities. The governments of Australia and New Zealand have already taken measures to reduce the company’s influence on their telecom networks.

The East is in the red

Huawei’s tribulations led to further losses in Asian markets, with China’s Shenzhen and Shanghai indices taking yet another battering. Chinese A-shares have been notable underperformers this year. Technology stocks were particularly weak, both on the mainland exchanges and in Hong Kong.

Other Pacific markets joined the rout too. Japan’s Topix was approaching bear-market territory by Thursday. Meanwhile, the Australian market fell on renewed trade concerns and disappointing third-quarter growth figures.

Brexit breakdown

The FTSE 100 was down 3.96% by Thursday’s close, falling to its lowest level in two years. Much of the loss occurred on Thursday itself, when a 3.5% slide marked the steepest one-day decline since the day after the Brexit vote in June 2016. All but three of the FTSE’s 100 constituents fell during the day.

This sell-off came as Theresa May’s Brexit plans were faced with further disruption. The government was forced to publish the legal advice it had received on its proposed Brexit deal. It was also held to be in contempt of parliament for not having done so earlier. Although the prime minister appears determined to press ahead with a vote on her deal on Tuesday, an initial defeat for the government now looks likely.

European markets fared little better. In Germany, the DAX entered a bear market (defined as a fall of 20% from its most recent peak). This came amid heightened concerns for the country’s manufacturers as the Sino-US relationship froze up again. The French and Italian markets also suffered steep declines. By Thursday’s close, the FTSE World Europe ex UK index was down 3.86%.

And finally …

While equity markets and the northern hemisphere are feeling the chill of winter, it’s a different matter Down Under. As the Australian summer sets in, the heat is driving many to seek the shade indoors.

The trouble is, it’s not just people who need a break from the soaring temperatures. And that means that Santa Claus isn’t the only seasonal visitor that’s likely to drop in. So spare a thought for Queensland’s Janice Terrill, who was bitten by a spotted python in her own bed.

The metre-long serpent had chosen to snuggle up in the relative cool of Mrs Terrill’s house in Grasstree Beach. Fortunately, spotted pythons aren’t venomous, Mrs Terrill is recovering, and a professional snake catcher ensured that the home-loving hisser would be spending Christmas in the wild.

The value of investments, and the income from them, can go down as well as up and you may get back less than the amount invested.

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