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D-PIMS Weekly Market Update - Week of 1st to 7th March 2021

Today’s Monday Update:

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

• Volvo’s entire car line-up will be fully electric by 2030, the Chinese-owned company said on Tuesday, joining a growing number of carmakers planning to phase out fossil-fuel engines by the end of this decade. “I am totally convinced there will be no customers who really want to stay with a petrol engine,” Volvo Chief Executive Håkan Samuelsson told reporters when asked about future demand for electric vehicles. “We are convinced that an electric car is more attractive for customers.”

China’s plan to dramatically reform Hong Kong’s electoral system, was unveiled in a parliamentary session in Beijing. This will upend the territory’s political scene, according to more than a dozen politicians from across the spectrum. The prospect of further bending the electoral process to China’s liking has also worried some pro-Beijing figures, who think it may be going too far and ultimately hurt Hong Kong. The province currently retains some autonomy from Beijing, and whose status as a global financial hub was built on the rule of law and civil liberties not allowed in mainland China.

• On Wednesday, Chancellor Rishi Sunak delivered his Budget speech and promised to do “whatever it takes”, including a five-month extension of Britain’s huge jobs rescue plan, to steer the economy through what he hopes will be the final months of COVID-19 restrictions. Sunak said the economy will regain its pre-pandemic size in the middle of 2022, six months earlier than previously forecast, helped by Europe’s fastest COVID-19 vaccination programme. But it will remain 3% smaller in five years’ time than it would have been without the damage wrought by the coronavirus crisis and extra support is needed now as the country remains under coronavirus restrictions.

To help deal with record levels of debt and in a first move to raise taxes, Sunak announced he would raise corporation tax to 25% from 19% from 2023, by which time the economy should be past the pandemic crisis. “Even after this change the UK will still have the lowest corporation tax rate in the G7 – lower than the United States, Canada, Italy, Japan, Germany and France,” he said. Small businesses will get relief from this rise. Sunak also said he would freeze the amount of money that people can earn tax-free and the threshold for the higher rate of income tax until 2026.

Gout medication, colchicine will be tested in a large UK study looking into potential early-stage COVID-19 treatments, University of Oxford researchers said on Wednesday. The trial, backed by the British government and called PRINCIPLE, is assessing drugs that may be used at home in the first 14 days of COVID-19 infection to help patients recover quicker and ward off the need for further intervention or hospitalisation. Colchicine is an inexpensive drug already being tested in UK’s RECOVERY study, which is the world’s largest trial of treatments for patients hospitalised with COVID-19.

• Britain’s medical regulator on Thursday said it would fast-track vaccines for coronavirus variants, adding that the makers of already-authorised shots would not need new lengthy clinical trials to prove their adapted vaccines will work. There is concern that some variants, such as those first found in South Africa and Brazil, may reduce the efficacy of the first generation of COVID-19 vaccines, and manufacturers are looking to adapt their shots. The accelerated process is based on that used for seasonal flu vaccines each year, the Medicines & Healthcare products Regulatory Agency (MHRA) said, and would be based on robust evidence that the shots create an immune response, rather than full clinical trials.

Retaliatory tariffs imposed by the United States on UK goods including Scotch whisky have been temporarily suspended, the international trade secretary Liz Truss has announced. In a de-escalation of a long-running dispute over aerospace tariffs, the suspension, will reduce the 25% tariff rate to zero per cent for four months. Welcoming the move, which also covers items such as pork, cashmere and cheese, the director general of the British Chamber of Commerce Adam Marshall said it was now “crucial” both London and Washington “find permanent solutions that give stability and certainty to firms”.

• Preliminary data from a study conducted at the University of Oxford indicates that the COVID-19 vaccine developed by AstraZeneca PLC is effective against the P1, or Brazilian, variant, a source with knowledge of the study told Reuters on Friday. The data indicates that the vaccine will not need to be modified in order to protect against the variant, which is believed to have originated in the Amazonian city of Manaus, said the source, who requested anonymity as the results have not yet been made public.

The U.S. economy created more jobs than expected in February as falling new COVID-19 cases and additional pandemic relief money from the government boosted hiring at restaurants, putting the labour market recovery back on firmer footing. Though job growth momentum is expected to build in the months ahead amid an acceleration in the pace of vaccinations and more fiscal stimulus, it will probably take several years for the labour market to heal from the deep scars inflicted by the pandemic, which is now in its second year.

• The U.S. Senate on Saturday passed President Joe Biden’s $1.9 trillion COVID-19 relief plan in a party-line vote after an all-night session that was delayed repeatedly as the Republican minority tried but failed to push through around three dozen amendments. The plan passed in a 50-49 vote with the support of every Democrat, but no Republicans. It is one of the largest stimulus bills in U.S. history and gives Biden his first major legislative victory since taking office in January.

• Over the week, all the main Global Stockmarkets were mixed, while worries over inflation persisted. The investment D-PIMS Portfolios were mostly down, especially the higher risk Portfolios. They were helped to some extent, by the allocations to domestic UK.


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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.