Market Round Up: FANGs Reclassified 🏁 – Oil Be There ⛽
1. FANGs Reclassified
Sector reclassification may sound like a rather boring subject. However, in this instance, it denotes a significant acknowledgement of the importance of tech stocks.
Standard and Poor’s (S&P) has revised the industry classification system used by all and sundry – the Global Industry Classification Standard, or GICS, to reflect that so many tech companies overlap the old established sectors of telecommunications, media and technology (TMT). The most significant change is the revamping of ‘Communication Services’ to include the likes of Facebook, Google (Alphabet), Twitter, PayPal, Snap and also more ‘established’ organisations such as Disney, Viacom and Fox. Apple stays in technology while Amazon moves to consumer discretionary.
So why should investors care about these changes? Well, consider any ETFs they may hold. It could just be that the funds they hold no longer include certain companies – and that may mean that their investment portfolio no longer reflects their investment strategy.
A side note. For you Invstrs, you’ll be pleased to know that we’ve been one step ahead of the game in recognising the TMT morph. Our Tech and Media sector classification already covers FANGS and its cousins.
2. Oil be there!
Oil has returned to a 4 year high, hitting above the $80 a barrel mark – despite President Trump’s demands for OPEC to turn on the taps and increase output. With the psychological barrier breached, oil analysts now believe a return to $100 is possible.
A combination of imposed sanctions on Iran, Venezuela’s further fall into Dante’s eternal circles of hell and Russia and Saudi Arabia’s decision to put a squeeze on output, means there’s simply not enough supply to gap-fill the expected 2 million barrel loss from U.S. imposed sanctions. There could be, but it is patently obvious we are now in the reins of global oil diplomacy. So expect a volatile ride in the market for the foreseeable future.
Related: Is an oil rally reversal on the way?