D-PIMS Weekly Market Update - Week of 17th to 23rd August 2020
Today’s Monday Update:
Over the last week, most news was focused on either the economy or the Coronavirus:
• Industry data showed on Monday, that a record number of homes were bought and sold between mid July and early August as pent-up demand from the coronavirus lockdown and a desire to leave London bucked the usual summer slowdown. Property website Rightmove, reported the highest number of home sales agreed since it began tracking the data more than 10 years ago, with transactions more than 20% higher than the previous record. Only in London was there the typical 2% monthly fall in asking prices, with prices up almost everywhere else in Britain other than London’s commuter belt. Estate agents also told Rightmove that buyers had been given extra impetus to move by the temporary exemption from property purchase taxes for homes costing up to £500,000, announced in July by the Chancellor.
Oil prices rose on Monday as China planned to increase U.S. crude imports, which countered rising tensions between the two major consumers, and as sources said OPEC+ producers almost fully complied in July with their global production cut accord.
• The pound rose on Tuesday, approaching a five-month high, driven by a weaker dollar, but analysts were cautious about the outlook for the pound as a new round of Brexit talks began. Prime Minister Boris Johnson’s spokesman said that Britain still believes a deal can be reached in September. The trade negotiations are scheduled up to 2nd October, less than a fortnight before the crucial EU summit. The EU has said negotiators must seal any deal by October to allow for ratification by the bloc’s 27 nations.
British retailer Marks & Spencer said on Tuesday it plans to cut a further 7,000 jobs, dealing the latest blow to the UK’s beleaguered retail sector from the COVID-19 crisis. M&S said it expected a significant proportion of the latest cuts would be through voluntary departures and early retirement. “These proposals are an important step in becoming a leaner, faster business set up to serve changing customer needs and we are committed to supporting colleagues through this time,” said Chief Executive Steve Rowe.
Health Secretary Matt Hancock, announced that England will scrap the government agency responsible for responding to public health emergencies. Public Health England, a cornerstone of the NHS, with responsibility for managing infectious outbreaks, will have its functions merged with the government’s contact tracing service into a new body to be known as the National Institute for Health Protection.
• There was news on Wednesday, that a new coronavirus-testing programme that is being set up at Heathrow Airport could allow passengers arriving from certain countries to exit the mandatory 14-day quarantine period early. More than 13,000 COVID-19 tests will be available to passengers each day, with results “within hours”. Arrivals will then take a second test at home and will be able to leave quarantine early if they pass both. People can test negative for coronavirus in the first few days after they have caught the virus while they are not showing symptoms. The second test is intended to catch cases where an asymptomatic person might have tested negative in the first instance. The two-test system is currently being used in Germany and Iceland.
The Government aims to introduce population-wide testing for coronavirus, the Health Secretary has said. Matt Hancock said ministers are “working as fast as we can” to achieve the “moonshot” of mass testing so restrictions can be eased. Mr Hancock told BBC Radio 4’s Today programme: “This is a really, really important drive that we have across Government to bring in mass testing, population-wide testing. The new technologies for testing that are coming on stream now are incredibly important. At the moment you have to send off a test to a laboratory and get it back and all the logistics of that takes time, it’s also quite expensive”
• On Friday, the latest negotiating round between Britain and the EU on their future relationship brought no breakthroughs over the week on the key sticking points, an official with the bloc said. “There were some technical exchanges that weren’t entirely pointless but nothing noteworthy on the topics that matter,” said the official, who is involved in the talks.
Transport minister Grant Shapps said on Friday that Britain is investigating using coronavirus testing to shorten quarantine times for travellers from restricted countries, but does not want to offer false hope that the rules can be changed easily.
British retail sales surged past their pre-coronavirus level in July, the first full month that shops selling non-essential goods were open since the UK went into lockdown in March. The unexpectedly robust retail sales figures released on Friday, showed the strength of consumer demand even as other parts of the economy are struggling to recover from recent hefty losses. The early reading of the IHS Markit/CIPS UK Composite Purchasing Managers’ Index (PMI), covering the services and manufacturing sectors, shot up to a nearly seven-year high of 60.3 from 57.0 in July, far above the 50 threshold for growth. A Reuters poll of economists had pointed to a reading of 57.1.
Separate government borrowing data showed UK public debt rose above £2 trillion in July for the first time and reached 100.5% of gross domestic product (GDP) its highest as a share of GDP since 1961.
• On Sunday, the U.S. Food & Drug Administration said it authorised the use of blood plasma from patients who had recovered from COVID-19 as a treatment for the disease. This news was likely to give early support to Markets for the coming week.
• Markets were mixed over the last week, with Asian Markets doing the best and European and UK Markets coming off worst. The D-PIMS Portfolios were mostly flat, benefiting from there diversification.
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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.