Trump’s improved odds power up gold and bitcoin, China trades lift commodity producers, Intertek hit by broker downgrade and Hollywood Bowl scores winning session

“Donald Trump has edged forward in the betting markets in the race to the White House, explaining why gold and bitcoin have been attracting attention in recent days,” says Russ Mould, Investment Director at AJ Bell.

“Betting markets are offering odds of 33/50* on Trump, which equates to a 60% probability of him winning the election. That compares to a 54.5% probability 10 days ago.

“Gold and bitcoin’s ascent can be directly linked to the dial moving in favour of Trump.

“Gold typically attracts investors’ attention when they are looking for a store of value during uncertain times. Trump winning the US presidential election would raise the risk of a trade war and his provocative nature could lead to heightened uncertainty on the markets. Owning gold is essentially an insurance policy against unknowns.

“It’s no coincidence that bitcoin has moved 13% higher in the past 10 days, either. Trump has promised to make America ‘the crypto capital of the planet’ and to build a strategic reserve of bitcoin. Investors might be trying to second-guess the election outcome and increase their exposure to the cryptocurrency ahead of the actual result, hoping bitcoin will go to new highs if there is a new leader of the country actively in favour of the asset.

“Equity markets don’t appear to be pricing in any particular outcome for the election yet. Shares have generally held up well around the world, including the US, and equity investors are focusing more on what they think will happen to central bank monetary policy to avoid any deep economic downturn.

“As we get closer to the 5 November election day, we might see equity investors become more confident about the outcome and make portfolio adjustments accordingly, yet that might not happen until the last minute as the tightly fought election battle could easily swing one way or the other in the interim period based on a single remark by either candidate.

“Most European equity markets were in the red on Monday apart from the FTSE 100 which advanced 0.3% to 8,384. Precious metals miner Fresnillo took the top spot on the UK risers thanks to gold price strength. The industrial mining sector and energy producers were also in fashion as investors crossed their fingers that Chinese economic stimulus measures would boost commodities demand. Several China-related investment trusts were also bid up, with Fidelity China Special Situations rising 5.1% and Baillie Gifford China Growth Trust up 3.3%.

“Testing group Intertek was the FTSE’s top faller thanks to a broker downgrade. RBC is worried about macro and geopolitical risks to parts of the testing, inspection and certification industry, which could make investors less willing to pay a higher multiple of earnings for Intertek’s shares, thus holding the stock back.”

Hollywood Bowl

“In a country with weather as unpredictable as the UK’s, it’s no surprise there is appetite for a relatively affordable indoor activity like bowling and that’s borne out by Hollywood Bowl’s full-year trading update.

“The company striking record revenue feels like a significant moment and, in a sign of how profitable this growth is, it also expects earnings to be a smidge above analysts’ expectations.

“Hollywood Bowl isn’t standing still, with plenty of investment in its existing estate in Canada and the UK as well as the roll-out of further sites, underpinned by a strong balance sheet and ongoing cash generation.

“Both markets have scope for further growth. Despite being the leading operator in its domestic market, Hollywood Bowl has somewhere around a 20% share. In Canada, the competition is fragmented.

“Hollywood Bowl’s investment in its sites has made them attractive places for people to frequent. That also makes the company an appealing tenant from the point of view of landlords. Investment in technology is also helping to bolster its offering.”

These articles are for information purposes only and are not a personal recommendation or advice.