D-PIMS Weekly Market Update - Week of 16th to 22nd August 2021
Today’s Monday Update:
Over the course of the last week, headlines were mostly Coronavirus and economy related:
• British employers plan to increase staff numbers by the most in more than eight years over the coming months, with few intending to make staff redundant when government furlough support ends next month, a survey showed on Monday. The quarterly survey by Britain's Chartered Institute of Personnel and Development (CIPD) added to signs of labour market shortages as the economy emerges from the Coronavirus pandemic, though it offered less evidence of wage or inflation pressures. "Employers are very optimistic, indicating strong recruitment intentions, and redundancy expectations appear much lower than originally predicted during the pandemic," Jonathan Boys, labour market economist at CIPD, said.
It was reported on Monday that the UK parliament will be recalled from its summer recess in the next week to discuss the situation in Afghanistan, a source at Prime Minister Boris Johnson's Downing Street office said, as Taliban insurgents entered Kabul.
From Monday, people who are fully vaccinated against Covid-19 will no longer have to isolate if they come into contact with someone who has tested positive for the virus. Instead, they will be advised to take a PCR test and wear a mask while waiting for the result. The change, also includes under-18s. Those who test positive, or begin to show symptoms, will still be legally required to self-isolate for 10 days.
• Data out on Tuesday, showed that UK job vacancies hit a record 953,000 in the three months to July, according to official figures. Unemployment fell to 4.7% in the three months to June, down slightly on the previous quarter, while average pay rose 7.4%, the Office for National Statistics (ONS) said. Chancellor Rishi Sunak said the figures showed the government's plan for jobs was working.
PCR tests for travel have become "a predictable Covid rip-off", says the ex-chair of the Competition and Markets Authority, Lord Tyrie. Lord Tyrie said the competition regulator had been "too slow to react" to complaints about testing providers. Holidaymakers have objected to high prices and poor service from many of the 400-plus test firms listed on the government's website.
Thousands of new jobs could be created by investing in clean hydrogen fuel to power vehicles and heat homes, the government says. Ministers have unveiled a strategy for kick-starting a hydrogen industry, which they say could attract billions of pounds in investment. Business Secretary Kwasi Kwarteng said on Tuesday, the fuel was also essential for UK efforts to reach net zero emissions. He said it had the potential to provide a third of UK energy in future.
On Tuesday, the S&P 500 had doubled on a closing basis from its Covid trough of 2,237.40 on 23 March 2020. It took the market 354 trading days to get there, marking the fastest bull market doubling off a bottom, according to a CNBC analysis of data from S&P Dow Jones Indices going back to WWII. On average, it takes bull markets more than 1,000 trading days to reach that milestone, the analysis showed.
• Figures out on Wednesday, showed that the UK inflation rate fell to 2% in the year to July as the final Coronavirus restrictions were removed. The Consumer Prices Index (CPI) measure of inflation dipped from 2.5% in the year to June, the highest level for nearly three years, the Office for National Statistics (ONS) said. The rate fell to the Bank of England's 2% inflation target, after being higher for two months in a row.
Nando's says it will lend some of its staff to its suppliers to help "get things moving" in the supply chain after shortages hit some of its shops. The restaurant group has had to shut around 50 outlets temporarily after apparently running short of its staple fare: peri peri chicken. The chain said delivery schedules meant the situation was changing rapidly and suggested customers check the website before they visit. The problem has also affected carmakers, transport operators, restaurants and pubs. Road haulage firms have been a particular pinch point because the industry was already short of qualified drivers.
Qantas has said all its employees must be vaccinated against Covid-19, making it the latest global airline to mandate jabs for staff. Frontline workers including pilots, cabin crew and airport staff must be fully vaccinated by mid-November. The company says its remaining employees have until the end of March next year to receive both doses.
On Wednesday, the US Federal Reserve bank released the minutes from their July meeting, showing that the majority of Fed officials were moving toward slowing their asset purchases (QE) later this year. That would be the first major step from the central bank toward tightening monetary policy since the pandemic began. "Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year,"
• On Friday, the UK's health regulator said it had approved an antibody cocktail developed by Regeneron and Roche to prevent and treat COVID-19, adding it was trying to roll it out to patients soon. The Medicines and Healthcare products Regulatory Agency (MHRA) said the drug Ronapreve could help prevent infection, help resolve symptoms of severe COVID-19 infection and reduce the chances of hospitalisation. "This treatment will be a significant addition to our armoury to tackle COVID-19," British health minister Sajid Javid said in a statement. Ronapreve can be taken via injection or infusion. It binds tightly to the coronavirus at the lining of the respiratory system and prevents it from gaining access to cells of the respiratory system, the MHRA said. The drug is not intended to be used as a substitute for vaccination, the MHRA said.
The estimated range for England's COVID-19 reproduction "R" number rose to 0.9 to 1.2, according to official data released on Friday, compared to 0.8 to 1.0 in last week's figures. That means that for every 10 people infected, they will on average infect between 9 and 12 other people.
• Over the week, the main Global Stockmarkets were down, especially in the Far East. The S&P 500 in the US and the UK’s domestic focused FTSE 250 fared amongst the best. The lower risk investment D-PIMS Portfolios were slightly down, the higher risk Portfolios more so. They were helped by their domestic UK allocations and also a weaker Pound, which helped the relatively large US exposure.
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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.