D-PIMS Weekly Market Update - Week of 19th to 25th October 2020
Today’s Monday Update:
Over the course of last week, most headlines were related to the Brexit or Coronavirus:
• Britain said on Monday that the door was still open if the European Union wanted to make some small concessions to save Brexit trade talks, but that unless the bloc budged, there would be a no-deal exit in 10 weeks.
British police forces have been granted access to details of people who have been told to self-isolate under the government’s ‘test and trace’ system, the Department of Health and Social Care (DHSC) said. “Where people fail to self-isolate and refuse to comply, officers can issue FPNs (Fixed Penalty Notice) and direct people to return to self-isolation. Officers will engage with individuals to establish their circumstances, using their discretion wherever it is reasonable to do so,” the National Police Chiefs Council (NPCC) statement said.
China’s economic recovery accelerated in the third quarter as consumers shook off their coronavirus caution, although the weaker-than-expected headline growth suggested persistent risks for one of the few drivers of global demand. Gross domestic product (GDP) grew 4.9% in July-September from a year earlier, official data showed on Monday, slower than the 5.2% forecast by analysts in a Reuters poll, but faster than the second quarter’s 3.2% growth.
• Britain said on Tuesday it would back human challenge studies, to accelerate the development of COVID-19 vaccines by exposing volunteers to the virus after they had received a vaccine candidate. The government said it would invest £33.6 million in the studies, in partnership with Imperial College London, laboratory and trial services company hVIVO and the Royal Free London NHS Foundation Trust.
A second British laboratory is joining a global lab network to assess data from potential coronavirus vaccines, set up by a major non-profit health emergencies group to establish the effectiveness of different vaccine candidates.
• EU chief negotiator Michel Barnier said on Wednesday that a Brexit deal is still “within reach”. He acknowledged the UK’s compromises and stressed the bloc’s willingness to compromise and move to “legal texts” – one of Boris Johnson’s key demands. No 10 called Mr Barnier’s comments “significant” and said David Frost would speak to his counterpart again.
• Information released on Thursday, showed that AstraZeneca’s Oxford COVID-19 vaccine accurately follows the genetic instructions programmed into it by its developers, to successfully provoke a strong immune response, according to a detailed analysis carried out by independent scientists. “The vaccine is doing everything we expected and that is only good news in our fight against the illness,” said David Matthews, an expert in virology from Bristol University, who led the research.
Chancellor Rishi Sunak has introduced further grants, and lowered the contributions employers must make under the government's coronavirus Job Support Scheme, as part of a new round of economic support. He extended the Jobs Support Scheme to include businesses which can open, but have witnessed a fall in demand, by lowering the required hours employees have to work to qualify for the support, down from 33% of normal hours to 20 per cent. The chancellor also revealed a dramatic cut in the level of employer contributions under the scheme. Businesses are now expected to cover just 5% of employee hours not worked, rather than the 33%, initially announced last month
Britain has begun rolling out rapid, lateral-flow COVID-19 tests to schools and universities, health minister Matt Hancock said on Thursday, adding that much more of life could return closer to normal if a regular mass-testing system were established. “Yesterday, we began the rollout of lateral-flow tests to schools and universities. Lateral-flow tests don’t require a lab or a machine. The kit gives you the result within minutes,” Hancock said, adding that millions of the tests had been purchased. “If we can deliver a mass testing solution, so pupils in a bubble don’t have to isolate for a fortnight when one in the bubble tests positive, we will not only help control the spread of the virus, we will help schools and teachers and parents to live their lives much closer to normal.”
• The chief negotiators of Britain and the European Union meet on Friday for intensive negotiations on a last-minute trade deal
Britain and Japan formally signed a trade agreement on Friday, marking the UK’s first big post-Brexit deal on trade, as it continues to struggle to agree on a deal with its closest trading partners in the EU. Japan also welcomed Britain’s interest in joining the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free trade deal, and intends to provide necessary support.
• Over the week, the main Global Stockmarkets where mixed with some up and some down, although after taking the strengthening Pound into account, they were mostly down. The Pound had been rising on the back of renewed talks between Britain and the EU, giving hope of a trade agreement that would avoid a disruptive split on 1st January 2021. The D-PIMS Portfolios were down over the week, especially the higher risk Portfolios, despite some internal currency hedging, which would have helped.
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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.