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D-PIMS Weekly Market Update - Week of 15th to 21st March 2021

Today’s Monday Update:

Over the course of last week, headlines were mostly economic or Coronavirus related:

• The decision by Germany, France and Italy to suspend AstraZeneca’s COVID-19 shots after several countries reported possible serious side-effects is a “political one”, the director general of Italy’s medicines authority AIFA said on Tuesday. “We got to the point of a suspension because several European countries, including Germany and France, preferred to interrupt vaccinations... to put them on hold, in order to carry out checks. The choice is a political one,” Nicola Magrini told daily la Repubblica in an interview.

The European Union will meet an end-of-March deadline for agreeing a cooperation pact with Britain in financial services, despite the clash between the UK and the bloc over Northern Ireland, the EU’s financial services chief said on Tuesday.

• The decision by more than a dozen European countries to suspend AstraZeneca’s COVID-19 shot faced deepening scrutiny on Wednesday, amid concerns the step could undermine public confidence and delay efforts to beat the Coronavirus pandemic. The role of Germany, and in particular Health Minister Jens Spahn, was in the spotlight after a chaotic round of telephone diplomacy at the start of the week, ended with the EU’s biggest states agreeing to put AstraZeneca on hold.

In a major victory for unions, Uber’s more than 70,000 British drivers will be paid the minimum wage while picking up and driving passengers, as part of the ride-hailing company’s agreement to grant workers’ rights after it lost a ground-breaking Supreme Court case last month. The agreement in Britain, classifies Uber drivers as workers who are entitled to fewer rights than those classed as employees, who are also guaranteed sick pay and parental leave. Uber said UK drivers would receive some added benefits, including paid holiday time, be enrolled in a pension scheme and receive no less than the minimum wage.

In the US, the Federal Reserve bank’s message on Wednesday, was that interest rates were not rising in a hurry. Even though it expects the U.S. economy to grow at 6.5% in 2021, unemployment to fall to 4.5% by the end of the year and the pace of price increases to exceed the Fed’s 2% target, at least temporarily. The bank’s chief Jerome Powell, noted the “strong bulk” of the Fed’s policy-setting committee anticipates no interest rate increase until at least 2024.

• On Thursday, the Bank of England announced it is keeping the UK base interest rate at 0.1%. This comes after UK GDP fell by 2.9% in January, to leave GDP around 10% below its 2019 Q4 level. However, the BoE did suggest the latest fall in GDP was “less weak than expected”. The Monetary Policy Committee (MPC) at the BoE, which sets monetary policy to meet the 2% inflation target, voted unanimously to maintain the rate at its historic low of 0.1%.

A review by the EU's medicines regulator concluded on Thursday, that the Oxford-AstraZeneca Covid-19 vaccine is "safe and effective", and its benefits outweigh the risks. The European Medicines Agency (EMA) found the vaccine was "not associated" with a higher risk of blood clots. But it said it would continue to study the possibility of such links.

The first high-level U.S.-China talks of the Biden administration got off to a fiery start on Thursday, with both sides levelling sharp rebukes of the others’ policies, in a rare public display that underscored the level of bilateral tension. The run-up to the meeting in Anchorage, Alaska, which followed visits by U.S. officials to allies Japan and South Korea, was marked by a flurry of moves by Washington that showed it was taking a tough stance, and blunt talk from Beijing. Still, the two sides reconvened for another meeting on Thursday evening, and a senior Biden administration official said that the session was “substantive, serious, and direct,” running well beyond the two hours originally allotted.

• Britain’s record-breaking borrowing to pay for the Coronavirus crisis is likely to be a little lower than forecast, after data published on Friday showed the budget deficit grew by less than expected in the first two months of 2021. The budget deficit in the first 11 months of the financial year has soared to almost £279 billion, the highest relative to the size of the economy since World War Two.

Also on Friday, France imposed a month-long lockdown on Paris and parts of northern France, after a faltering vaccine rollout and spread of highly contagious Coronavirus variants, forced President Emmanuel Macron to shift course. Although Macron stopped short of ordering a nationwide lockdown, the lockdowns may be extended to other regions if needed. Since late January, when he defied the calls of scientists and some in his government to lock the country down, Macron has said he would do whatever it took to keep the euro zone’s second largest economy as open as possible. However, this week he ran out of options just as France and other European countries briefly suspended use of the AstraZenca vaccine. His prime minister, Jean Castex, said France was in the grip of a third wave, with the virulent variant first detected in Britain, now accounting for some 75% of cases. Intensive care wards were under severe strain, notably in Paris.

German health minister Jens Spahn on Friday, dampened hopes that further Coronavirus restrictions will be lifted, saying rising infections could mean that curbs to slow the spread of the virus may have to be re-imposed. “The rising case numbers may mean that we cannot take further opening steps in the weeks to come. On the contrary, we may even have to take steps backwards,” Spahn told a weekly news conference.

Britain will pilot using COVID-19 certificates to re-open sport to fans, culture minister Oliver Dowden said on Friday, saying it was crucial to get crowds back to major events this summer, for the future of the industry. “We’re working with many, many people to see how we can get people back safely in large numbers, because if we don’t manage to do it this summer... I’m really worried about the future of those industries,” he added, also referring to theatres.

Nearly a dozen countries resumed the use of AstraZeneca’s COVID-19 shots on Friday, as EU and British regulators said the benefits outweighed any risks.

• Official data showed on Sunday, more than 27.6 million people in Britain, well over half the adult population, have received at least one dose of a COVID-19 vaccine, after a daily record of 844,285 doses were administered the previous day. Some 2.2 million people have had both doses of a vaccine, the data showed. “This mammoth team effort shows the best of Britain,” Health Secretary Matt Hancock tweeted, hailing the second daily record number of doses administered in as many days. The daily release of COVID-19 data in the United Kingdom showed that 33 new deaths were recorded on Sunday, the lowest figure since October and down from peaks of well over 1,000 deaths per day in January and February.

• Over the week, the main Global Stockmarkets were mixed, with more down than up. Markets were still worrying about the future threat of inflation. The investment D-PIMS Portfolios were slightly down over the week. They were helped by their diverse allocations.

 

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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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