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D-PIMS Weekly Market Update - Week of 10th to 16th August 2020

Today’s Monday Update:

Over the last week, most news was political economic or Coronavirus related:

• The week started on Monday with news that Donald Trump had signed an executive order, which will provide up to $400 million in enhanced unemployment benefits. This was while Congress are still deliberating over further help for the US economy.

Chinese air force jets briefly crossed over the mid-line of the Taiwan Strait on Monday and were tracked by Taiwanese missiles, Taiwan’s government said, as U.S. health chief Alex Azar visited the island to offer President Donald Trump’s strong support. Azar arrived in Taiwan on Sunday as the highest-level U.S. official to visit in four decades, a trip condemned by China which claims the island as its own, further irritating Sino-U.S. relations.

London-listed shares rose on Monday as a slowdown in China’s factory deflation in July brewed optimism around a post-pandemic economic rebound, while energy stocks tracked a jump in oil prices.

• Figures out on Tuesday showed the number of people in work in Britain fell by the most since 2009 in the three months through June, as the coronavirus crisis took a heavy toll on the labour market, even with the government’s huge jobs protection scheme still in place. Led by a record plunge in self-employed workers, there were 220,000 less people employed in the second quarter, the Office for National Statistics said.

Spain’s government defended its response to the coronavirus pandemic after official data showed the country had overtaken Britain, to register the highest total number of cases in Western Europe. Health ministry data showed the cumulative total was 322,980, compared with 311,641 in Britain. Analysis of official figures by the AFP news agency showed the country reported an average of 4,923 new daily Covid-19 cases during the previous seven days, which was higher than that of Britain, France, Germany and Italy combined.

U.S. Democratic presidential candidate Joe Biden on Tuesday picked Senator Kamala Harris as his choice for vice president, making her the first Black woman on a major-party U.S. presidential ticket and giving him a partner well prepared to go on the attack against Republican President Donald Trump.

Coronavirus cases in France nearly doubled in the previous 24 hours as Prime Minister Jean Castex warned that the country had been going "the wrong way" for two weeks.

Russia approved the world’s first vaccine for Covid-19, President Vladimir Putin said. The vaccine was developed at Moscow’s Gamaleya Institute in Moscow and on Tuesday received approval from the country’s health ministry, even though human trials are still incomplete.

• German Health Minister Jens Spahn on Wednesday said Russia’s COVID-19 vaccine had not been sufficiently tested, adding the aim was to have a safe product rather than just being first to start vaccinating people.

Wearing a face mask became compulsory on Wednesday in all public places in Brussels, as the number of COVID-19 infections rose to a government alert level that puts the city among the worst affected in Europe.

Kamala Harris made her campaign-trail debut as Joe Biden’s Democratic running mate on Wednesday, delivering a strong rebuke of President Donald Trump’s leadership and highlighting the historic significance of her new role.

Technology shares bounced back Wednesday, helping the S&P 500 resume its march toward record levels. Wednesday’s strong performance put the S&P 500 back within 1% of its intraday record of 3,393.52.

• Hong Kong media tycoon Jimmy Lai said on Thursday that he was overwhelmed by the support he got after becoming the most high-profile person to be arrested under a new national security law and urged patience in a “long-term fight” for democracy. Lai, a staunch supporter of the city’s democracy movement, was arrested on Monday on suspicion of collusion with foreign forces as police raided the offices of his Apple Daily tabloid. He was released on bail early, and greeted by a throng of supporters chanting “fight till the end”.

In China there were fears of financial Iron Curtain as tensions with the U.S. rise. A sharp escalation in tensions with the United States has stoked fears in China of a deepening financial war that could result in it being shut out of the global dollar system - a devastating prospect once considered far-fetched but now not impossible. Chinese officials and economists have in recent months been unusually public in discussing worst-case scenarios under which China is blocked from dollar settlements, or Washington freezes or confiscates a portion of China’s huge U.S. debt holdings.

On Thursday, investors picked positives out of recent economic data and bet on China and the United States sticking with their trade deal at a crucial weekend meeting.

• Transport minister Grant Shapps said on Friday that the UK it had no choice but to quarantine French arrivals. Britain imposed a 14-day quarantine on all travellers arriving from France due to rising coronavirus infection rates there. France, the Netherlands, Monaco, Malta, Turks & Caicos & Aruba were all included on the latest list. Unsurprisingly UK listed shares of travel related companies fell on the news.

Britain will buy potential COVID-19 vaccines from U.S. drugmakers Johnson & Johnson and Novavax Inc, the companies said on Friday, boosting the number of deals it has with drugmakers as the global vaccine race rages on. Britain and the United States are in the lead with six vaccine deals with drugmakers each. The latest agreements bring Britain’s total number of doses secured to 362 million for a population of 66 million.

• Over the week, the main Global Stockmarket indices were generally up, apart from China. This was mostly due to better economic news and hopes around Covid vaccine developments. The higher risk D-PIMS Portfolios were driven up by rising equity markets. The lower risk Portfolios were held back by Bond Markets, that suffered from ‘profit taking’ after reaching record highs.

 

The value of investments and the income from them can fall as well as rise and you may not get back the original amount you invested.


Past Performance is no guarantee of, or guide to future returns.


The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.

 

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