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- 🗳 Rising political tension
Good morning, investors! Big names took a big hit yesterday as politics came into play.
Today we cover:
Political tension rises.
Gold continues to be gold.
Stocks take a beating.
📊Economy and News
Political tension rises
The Biden administration is contemplating a broad rule to limit companies from exporting crucial chipmaking equipment to China.
This will have an impact on major names like ASML, Nvidia, and TSMC. Plus, there’s more to worry about.
In an interview with Bloomberg Businessweek published Tuesday, Donald Trump suggested that Taiwan should compensate the U.S. for its defense. He also claimed that Taiwan had taken "about 100%" of America's semiconductor business.
These comments have cast uncertainty over the U.S.'s commitment to defend Taiwan if Trump is re-elected, especially in the event of an attack by China, which regards the democratically governed island as its territory.
Global hits:
British pound breaches $1.30 for the first time in a year as Labour is seen ushering in stability.
U.S. and Saudi Arabia sign agreement for joint space exploration and research.
UK inflation holds steady at Bank of England’s 2% target, above expectations.
Countries getting richer: “Türkiye stands out with a staggering growth of over 157% in wealth per adult between 2022 and 2023, leaving all other nations far behind,” Swiss bank UBS wrote in its Global Wealth Report 2024.
The next-highest countries in terms of average wealth growth per adult were Qatar at 20% and South Africa with about 16%. In the U.S., average wealth per adult grew just 2.5%.
Inflation in Turkey sits at just over 71%, an eye-watering figure for its population of 85 million people, many of whom have seen a dramatic drop in their purchasing power over the last several years.
Bit about gold: Gold prices extended their rise to a fresh all-time high on Wednesday, as growing optimism for an interest-rate cut from the U.S. Federal Reserve in September and a weaker dollar boosted demand.
Spot gold eased about 0.2% to $2,462.85 per ounce, driven by profit-taking, after the bullion hit a high of $2,482.29 earlier in the session. U.S. gold futures steadied at $2,461.88.
📈Stocks
S&P 5005,588.27 (-1.39%)
DJIA41,198.08 (+0.59%)
NASDAQ17,996.92 (-2.77%)
BRENT CRUDE 85.66 (+1.61%)
* Prices as of Jul 18th, 12:20 AM UTC
Nasdaq posts worst day since 2022
The S&P 500 and Nasdaq Composite retreated on Wednesday as the rotation out of high-flying technology shares and into more rate-sensitive names continued.
A gain of about 4.5% in UnitedHealth following a Wall Street upgrade on the back of its strong earnings report helped lift the 30-stock index. This builds on Tuesday’s rally of more than 700 points, which marked the blue-chip index’s best day in more than a year.
On the other hand, the S&P 500 and Nasdaq were weighed down by a continued pullback in megacap technology stocks. That marks a turn after tech stocks’ monster run this year amid the artificial intelligence craze.
In fact, Wednesday’s session was the first since 2001 in which the Nasdaq posted a loss exceeding 2.5% while the Dow registered a gain. Within the S&P 500, information technology and communication services were the two worst performing sectors in the session.
Notably, Meta Platforms tumbled -5.7%, while big tech peers Netflix and Microsoft dropped more than -1%. Apple slid -2.5%.
The Russell 2000 slipped -1%, ending its five-day win streak. Still, the small cap-focused index has climbed more than 9% over the last five trading days as the market rally broadened out. Meanwhile, the Nasdaq has shed more than 3% in the same period amid the tech sell-off.
Adidas goes higher: Adidas nudged higher on Wednesday after the company announced it would hike its full year 2024 earnings guidance.
Preliminary second-quarter earnings came in better than expected, the German sportswear company said.
Good to know: Elon Musk says he’s moving SpaceX and X out of California.
💵Personal Finance
What is dollar cost averaging?
Dollar cost averaging can be defined as a technique used to ”manage price risk when buying assets such as stocks, ETFs, and mutual funds.”
It involves buying over time at regular intervals, thus decreasing "the risk of paying too much before market prices drop." In other words, instead of purchasing a high number of shares or any other assets at a single price point, you buy in smaller amounts at regular intervals.
How does it work?
An interesting thing about prices is that they don’t always move in one direction. They move in both directions and as an investor, when following the dollar cost averaging technique, your aim should be to buy without looking at the prices.
You decide how much you want to spend on an asset then you purchase it in intervals to bring your average cost down.
Here’s an example:
You can use this technique in a variety of situations, including retirement planning and 401(k) plans.
A 401(k) plan, for example, gives employees the power to determine how much they wish to contribute and to what. Then, investments can be made automatically every pay period. Based on the changing market, a specific number of securities get added to the employee’s retirement accounts.
What are its benefits?
Here are some of the main benefits of this investment technique:
Helps bring the average cost down.
Encourages regular investments, which helps build wealth.
It helps ensure that you are ready whenever the time is right.
It takes emotions out of the deal and reduces the risk of emotional buying.
With automation, you do not have to worry about ‘buying’.
So, is it worth it? Check this video for more:
💰 Be a Better Investor
“To live is to choose. But to choose well, you must know who you are and what you stand for, where you want to go and why you want to get there.”
Resources:
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👩🏽⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.