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Take stock: The past week in the markets

Amazon share price takes a hit…

THE higher you rise, the further you fall. The same is true for shares and people. Last week I wrote about Facebook’s share price plummet. More than $50billion was shaved off Zuckerberg’s baby after the Cambridge Analytica scandal and regulators are now investigating how the company monetises data.

This week, President Donald Trump, who has long had Amazon in his sights, made threatening noises about competition law and played the ‘you guys don’t pay enough taxes’ card. Trump wants to see ‘a level playing field between internet vendors and mom-and-pop stores’. This promptly wiped off 5% from Amazon’s share price.

This impacts most of us with money in the stock market. The powerful tech club, which includes Google, Apple, Facebook and Amazon, are currently sweating uncomfortably as the world’s media (and media-hungry politicians) shine a very strong light in their faces. Their future revenues and share prices are being questioned. This makes most global share funds wobble. The fascinating thing about stock markets is that they are not governed by economics, maths nerds in suits and logic. They are governed by emotion and by fear.

This week’s bedfellow to the falling from grace of the tech darlings is China which, in response to Trump’s populist trade war has been to slap import tariffs on 128 goods as of Monday. Arguably taxes on pork, ginseng and berries are not going to cause a global crisis but, as with all fights, people keep on looking for bigger sticks until someone reaches for a gun. We wait for America’s response to this latest salvo, as stock markets watch with concern.

…as tech firms suffer

Does it matter to me? In short, yes. Even if you don’t actively invest in shares, you are likely to have a workplace pension. And that pension will very probably have a decent allocation to US shares.

Apple, Amazon and Alphabet make up about 10% of the Standards & Poor’s 500 index and have a combined value of $2.3trillion. Add Microsoft and Facebook in the mix and these form about 15% of the index. Technology has become all powerful and makes up a quarter of the main US market.

Their decline shaved over 2% off the index on Monday and it has now fallen by over 10% since the beginning of the year. In London, after the long Easter weekend, the stock market caught America’s cold and was down 0.5% at lunchtime yesterday. Markets are jittery and tech is leading the wobble.

Pensions get a shake-up

What’s happened to my salary?

If you’re over 22 and earn more than £10,000 a year, look carefully at your pay packet at the end of April. New government legislation means that we now have to be offered a pension at work. We pay in 1% and our employer matches it with 1%. From Friday, these amounts are going up. You’ll now pay 3% and your employer will pay 2%. This is typically on all earnings between about £5,000 and £45,000. You can opt-out and say you don’t want to take part. But this is generally a bad idea as you’ll lose that free 2% from your company.

Holly Mackay is founder and CEO of Boring Money, boringmoney.co.uk