D-PIMS Weekly Market Update - Week of 14th to 20th December 2020
Today’s Monday Update:
Over the course of last week, most headlines were related to the Coronavirus or Brexit:
• London was moved into England’s highest tier 3 of COVID-19 restrictions, the government said on Monday, citing an exponential rise in infection rates. Health Secretary Matt Hancock also said more than 1,000 cases of a new variant of the coronavirus had been identified, mainly in southeast England where the variant may be associated with a rapid rise in infection levels.
President-elect Joe Biden delivered a forceful rebuke on Monday to President Donald Trump’s attacks on the legitimacy of his victory, hours after winning the state-by-state Electoral College vote that officially determines the U.S. presidency. Monday’s vote, typically a formality, assumed outsized significance in light of Trump’s extraordinary effort to subvert the process due to what he has falsely alleged was widespread voter fraud in the Nov. 3 election
• Two of Britain’s most influential journals for healthcare and medical professionals jointly called on the government on Tuesday to scrap plans to relax COVID-19 restrictions for five days around Christmas or risk overwhelming the health service. In what was only their second joint editorial in more than 100 years, the British Medical Journal and the Health Service Journal said the government should be tightening the rules rather than allowing three households to mix over five days.
India and Britain will push negotiations on trade ties, their foreign ministers said after talks in New Delhi on Tuesday. Indian Foreign Minister S. Jaishankar said trade ministers from both countries had held discussions and there was “a serious intent” to deepen trade.
• The European Union’s chief executive said on Wednesday that she could not say if there would be a trade accord with Britain but there had been progress and that the next few days would be critical. “As things stand, I cannot tell you whether there will be a deal or not. But I can tell you that there is a path to an agreement now. The path may be very narrow but it is there,” European Commission President Ursula von der Leyen said.
Britain and Mexico signed a deal on Tuesday to keep trade flowing between the two countries on existing terms after Britain leaves the European Union’s common trade policy. Truss also said Britain and Mexico had agreed to begin talks on a deal which would go further than the continuity agreement. It’s another really important stepping stone toward the UK joining the Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTPP), and I look forward to making our application to do just that early next year,” Truss said.
Britain’s top court gave the go-ahead to the expansion of Heathrow Airport on Wednesday, allowing the £14 billion pound plan to proceed after decades of legal battles and political wrangling. The Supreme Court ruling overturned a previous court decision that had blocked the plan on environmental grounds.
The Federal Reserve on Wednesday held interest rates at near-zero, but messaged that it would not begin tapering its asset purchase program until “substantial further progress” has been made in the economic recovery. In recent months, the Fed has been aggressively buying U.S. Treasury bonds and mortgage-backed securities to the tune of $120 billion per month.
• On Thursday, British finance minister Rishi Sunak said he would tackle the country’s coronavirus-inflated budget deficit, because of the risks of a future shock to the economy and higher borrowing costs that could hammer the public finances. “We now have had two of these things in a decade: who knows what the next shock will look like?” After a spending surge authorised by Sunak, Britain is on course to borrow £400 billion pounds in the current financial year, equivalent to almost 20% of its economic output, or double the level of the global financial crisis. Public debt has soared above 2 trillion pounds and stands at more than 100% of gross domestic product, its highest since the 1960s.
French President Emmanuel Macron has tested positive for coronavirus, his office said on Thursday, sparking a track and trace effort targeting EU leaders and senior officials who met him in recent days.
• EU chief negotiator Michel Barnier said on Friday, that Britain and European Union have just hours left to navigate the very narrow path to a trade deal that would prevent the most turbulent finale to the Brexit crisis in less than two weeks’ time. As talks went down to the wire, both sides were demanding the other compromise amid a flurry of often conflicting messages that, variously, a deal is possible, a deal is in serious trouble or that a deal is imminent.
• Over the weekend, London and the South East of England was moved into a newer higher ‘Tier 4’ of Covid restrictions. These were broadly similar the last Lockdown measures. The ‘Christmas easing’ was also cancelled for Tier 4 and reduced to Christmas Day only for the rest of England. European countries were quick to react to the worsening virus picture in the UK, with France halting lorry movements for 48 hours and blocking flights from the UK, in line other EU Countries.
• Over the week, the main Global Stockmarkets where mostly up, but after taking the strengthening Pound into account returns on Global Indices were mostly negative. The investment D-PIMS Portfolios were up over the week, especially the higher risk Portfolios. They were helped by their the element of currency hedging that guarded against the rising value of the Pound.
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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.