D-PIMS Weekly Market Update - Week of 21st to 27th December 2020
Today’s Monday Update:
Over the course of last week, most headlines were related to the Coronavirus or Brexit:
• On Monday, the United Kingdom was shut off from much of Europe after its closest allies cut transport ties due to fears about a new strain of the coronavirus, sowing chaos for families and companies just days before it exits the European Union’s orbit.
France shut its border to arrivals of people and trucks from the United Kingdom, closing off one of the most important trade arteries with mainland Europe, a step Transport Secretary Grant Shapps said was surprising. “I’m in touch with my opposite number in France and we’re doing everything we can to get that restarted, in fact they’ve said to us they want to restart the hauliers as quickly as possible,” Shapps told Sky.
After months of inaction, the U.S. Congress voted through a $900 billion stimulus package that would provide new assistance for individuals and businesses battered by the surging coronavirus pandemic. The bill will see direct payments made to most Americans and provide enhanced payments to unemployed people. It would expand a small-business lending program and steer money to schools, airlines, transit systems, and vaccine distribution.
• Figures released on Tuesday, showed that Britain’s economic recovery from its coronavirus crash was quicker than expected in the third quarter, according to official data, which again showed government borrowing soaring to pay for the coronavirus crisis. Gross domestic product grew by a record 16.0% from July to September, revised up from a previous estimate of 15.5%.
European Commission President Ursula von der Leyen and British Prime Minister Boris Johnson spoke on disagreements over fisheries that are barring a new trade deal, as well as the latest on coronavirus, in a call on Monday, sources said.
EU sources added that the bloc was now willing to accept a reduction in the value of its catch in UK waters of up to 25% over a period of time from 2021. The length of that, as well as agreeing how the bloc could retaliate should Britain cut its industry off afterwards were still the sticking points in trade talks just nine days before Britain leaves the bloc’s single market and customs union, meaning current trading rules will no longer apply.
• The British government revied whether it needed to impose its strictest COVID-19 restrictions on more of the country on Wednesday, as a highly infectious variant continues to spread but will not change Christmas rules, a minister said.
UK midcap stocks inched higher on Wednesday on hopes of a Brexit trade deal and France lifting a freight ban aimed at controlling the spread of a highly infectious new coronavirus variant.
• After all night negotiations, Britain and the European Union were on the cusp of striking a narrow trade deal on Thursday Morning, swerving away from a chaotic finale to a Brexit split. While a last-minute deal would avoid the most acrimonious ending to the Brexit divorce, the United Kingdom is heading for a much more distant relationship with its biggest trade partner than almost anyone expected at the time of the 2016 Brexit vote.
Later in the day the deal was confirmed, after UK and European Markets closed early for Xmas.
• Over the weekend, after threatening all week not to sign the deal that had been agreed the previous Monday, U.S. President Donald Trump on Sunday signed into law a $2.3 trillion pandemic aid and spending package, restoring unemployment benefits to millions of Americans and averting a federal government shutdown in a crisis of his own making.
Europe launched a massive vaccination drive on Sunday, with pensioners and medics lining up to take the first shots to see off the COVID-19 pandemic that has crippled economies and claimed more than 1.7 million lives worldwide.
• Over the shortened week, the main Global Stockmarkets were mostly down, over Brexit negotiations drama and Donald Trump’s threats to veto the aid package. The investment D-PIMS Portfolios were slightly down over the short week. They were helped by their element of UK domestic 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.