London View

US Indices End Month on a Strong Note, The Return of HMV

After a shaky start to August, the US Indices ended the month in a stronger position, with the S&P 500 closing up by 0.33% at 2,003.37 and the Dow closing up by 0.11% at 17,098.45, with strong macroeconomic numbers boosting perceptions of financial recovery as the US seems to move beyond the dark clouds of the ’08 financial crisis. Europe, however, is another matter entirely. Hopes of a Euro zone rally earlier this year proved to be short-lived, as reams of punishing economic data have hit a great many euro-area countries, from the strongest to the weakest.

Today’s Manufacturing PMI numbers for the Euro zone brought mixed news; France surprised many by beating expectations, but this was outweighed by Germany and Italy falling short of the predictions. The Euro zone PMI as a whole came in slightly lower than expected – at 50.7 rather than 50.8. Although readings of above 50 are generally seen as positive, this figure – down from 51.8 last month – provides further ammunition for those criticizing Mario Draghi for failing to announce proper quantitative easing measures for the Euro zone. However at the Jackson Hole economic symposium a week ago Mr Draghi hinted at a preparedness to take further steps should the Euro zone economy continue to worsen. The DAX and CAC are both down this morning, at 0.32% and 0.38% respectively. The UK’s FTSE index is also down - by 0.21% - after UK Manufacturing PMI figures also failed to meet expectations, coming in at 52.5 rather than the 55 prediction.

Chinese Manufacturing Data was also weak, but the Shanghai Composite shrugged off the figures, closing up by 0.83% as stocks continued to gain due to last week’s statement of upcoming reform measures in the Chinese Defense Sector due to be announced next month. The news failed to make much of a mark on the Hang Seng, however, which had issues closer to home to look to after Beijing’s decision yesterday to bar open election in Hong Kong, allowing only approved candidates to run for office. The H-K based index closed roughly level, up by just 0.02%.

After Pfizer’s attempts to take over Astra Zeneca in May, they were given a 90 day waiting period before being allowed to make any further offers. With that period close to expiration, shares in the UK pharmaceutical company spiked last week amidst speculation that Pfizer  would come back for another try with an increased bid. AstraZeneca’s share price has been volatile this morning, reaching a high of 4,609 and a low of 4517.

Just a year and a half ago HMV was teetering on the edge of bankruptcy, before being rescued by Hilco. Now the entertainment company seems to be experiencing a phoenix-like comeback – a month ago it took second place in the UK’s entertainment retail market and the CEO claims that it’s on course to push Amazon off the top spot when it comes to CD and DVD sales. Downsizing from 400 stores to 125, as well as retargeting by focusing on live concerts and record signings, HMV appears to be luring customers away from regular supermarkets. With a 3% increase in total physical music sales from January to June 2014, HMV seems to no longer be on the ropes.