Today, I’m going to talk about the UK consumer and price weakness in metals that go into electric vehicles I also talk about Microsoft’s new London shop, the challenges facing Walmart, the impact of potential US tariff rises on European car imports and Baidu’s problems.
UK Consumer News
So the good news continues for UK consumers as new research shows that skills shortages are pushing up wages, with pay rising about 2.5% on average versus 2% in the final quarter of last year.
Elsewhere, a report by online estate agent Rightmove says that asking prices have risen at their lowest rate in a decade – so if you put the two together along with a super-low interest rate and mortgage rates, you would under normal circumstances have decent conditions for house buyers.
However, given Brexit uncertainties, the housing market remains sluggish for the moment.
Electric Vehicle Metals
The next thing I wanted to talk about was price weakness in metals that go into electric vehicles or, more specifically, those that go in batteries to power these vehicles.
Cobalt prices have fallen by 30% so far THIS YEAR and lithium prices have fallen for the tenth month in a row to multi-year lows. This has occurred because many investors expected a demand boom for the metals that didn’t quite materialise given the subsequent loss in momentum of smartphone sales and the economic slowdown in China. Price weakness has also been down to the relative abundance of lithium in South America and Australia and the supply glut of cobalt from the Democratic Republic of Congo.
Companies such as First Cobalt Group and Lithium Americas Corp have seen their share prices fall by 83% and 57% respectively as investors abandoned these failed “hot” plays but I still think that they are worth looking at considering the ongoing rise in demand for electric vehicles – albeit from a low base. Until there is a major change in battery technology, I would have thought that demand for these metals will continue to rise.
Given the DRC’s political instability and the fact that it supplies 70% of the world’s cobalt, a supply shock there could prompt a turnaround.