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D-PIMS Weekly Market Update - Week of 11th to 17th May 2020

Today’s Monday Update:

Over the last week, most news was once again Coronavirus related:

• Britain and the European Union started their penultimate scheduled round of trade talks on. The week’s round covered trade in goods and services, fisheries, transport and aviation, energy and other matters. Another round is planned for the week of 1st June. The end of that month marks a deadline for both sides to assess progress so far and agree on any extension of talks.

Also on Monday, Spanish cafes reopened as the country’s daily death toll fell to a seven week low. About half of Spain’s 47 million people progressed to the so-called Phase 1 of a four-step plan to relax one of Europe’s strictest lockdowns, after the government decided that the regions in which they live met the necessary criteria. However, Madrid, Barcelona and other cities including Valencia, Malaga and Granada will remain in Phase 0, much to the annoyance of regional governments struggling with the economic implications of a prolonged lockdown.

• Ryanair on Tuesday confirmed it will return to 40% of its planned flight schedule from 1st July and will require passengers to wear face coverings and to ask crew permission to use the toilet. The Irish airline, Europe’s largest low-cost carrier, is to begin to fly 1,000 flights per day on 1st July, up from a skeleton service of 30 flights per day it is currently operating, it said in a statement. That will allow it to cover 90% of its pre-crisis network, but with fewer frequencies, it said.

Britain extended its job retention scheme - the costly centrepiece of its attempts to mitigate the coronavirus hit to the economy - by four more months on Tuesday, but told employers they would have to help meet the cost from August. The Chancellor, Rishi Sunak said there would be no changes to the scheme, which pays 80% of the wages of 7.5 million workers who are temporarily laid off, until the end of July. From August, the process would continue with greater flexibility to support the transition back to work, allowing employers currently using the scheme to bring furloughed employees back part-time and pay the appropriate portion of salary. The scheme is now expected to close by the end of October. It had previously been due to run until the end of June.

The Spanish government ordered a two-week quarantine for all travellers coming into the country from 15th May in a bid to curb the spread of coronavirus, after one of the Europe’s strictest lockdowns helped slow down the epidemic in Spain. Incoming travellers will have to remain locked in and will only be allowed to exit for grocery shopping, visits to health centres and in any “situation of need”, an official order published on Tuesday said.

The latest data showed that in April, U.S. consumer prices dropped by the most since December 2008, weighed down by a plunge in demand for gasoline and services including airline travel, as people stayed home during the coronavirus crisis.

• On Wednesday, the U.S. special envoy for Iran, Brian Hook, publicly confirmed threats to trigger a return of all United Nations sanctions if the U.N. Security Council does not extend an arms embargo on Tehran. Washington had notified Britain, France and Germany of its plan.

The U.N. embargo is due to expire in October, under a 2015 Iran nuclear deal that U.S. President Donald Trump quit in 2018. Washington argues it can trigger a return of U.N. sanctions because a 2015 Security Council resolution enshrining the deal still names the United States as a participant.

• Swiss drugmaker Roche Holding AG said on Wednesday it was in talks with the NHS and the UK government about a phased roll-out of antibody test kits as soon as possible. The company added it will be able to provide hundreds of thousands of antibody test kits to the UK per week. This was after Public Health England (PHE) found them reliable. PHE, which conducted an independent evaluation of Roche’s antibody test in the previous week, said it found Roche’s test has a specificity of 100%.

• On Friday, Britain gave the green light to Abbott Laboratories to produce another COVID-19 antibody test. Mass antibody testing with millions of kits is being considered by many countries as a way to speed up the reopening of economies devastated by lockdowns and to introduce more tailored social distancing measures.

The U.S. Department of Commerce on Friday announced that it was extending the Temporary General License that allows certain transactions with Huawei Technologies Co Ltd for another 90 days. The license allows certain transactions despite Huawei’s placement on a blacklist that restricts U.S. suppliers from doing business with the Chinese company.

• Over the Weekend expectations of negative interest rates increased in the UK, when the Bank of England’s chief economist was quoted as saying the BOE was looking more urgently at options such as negative interest rates. This comes as policymakers debate further steps to support the struggling economy.

On Sunday, the business minister Alok Sharma said the UK death toll had increased by the lowest amount since 24th March, having risen by 170. Sharma also said that Oxford University and drug maker AstraZeneca had struck a global licensing deal for a vaccine that Oxford scientists were working on. They are one of the front runners in the global race to provide protection against the COVID-19 pandemic. If the vaccine proves successful, AstraZeneca will mass produce 100 million doses, with up to 30 million doses available for people in the UK by September.
“The UK will be first to get access,” Sharma said, adding that the government was providing an additional £84 million in funding to British researchers working on potential vaccines.

• Over the week, the main Global Stockmarket indices were down, particularly in Europe and the US. This was mostly over ongoing economic concerns caused by the necessary lockdowns. Inevitably, the D-PIMS Portfolios were a bit down, more so the higher risk Portfolios.

 

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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