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D-PIMS Weekly Market Update - Week of 25th to 31st January 2021

Today’s Monday Update:

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

• US President Joe Biden took steps on Monday to harness the purchasing power of the United States government, the world’s biggest single buyer, to increase domestic manufacturing and create markets for new technologies. Biden signed an executive order aimed at closing loopholes in existing “Buy American” provisions, which structure the $600 billion in goods and services the federal government buys each year, making any waivers more transparent, and creating a senior White House role to oversee the process.

• On Tuesday, German Health Minister Jens Spahn said he backed proposals to restrict vaccines leaving the EU, saying Europe should have it’s “fair share”. This was in response to AstraZeneca’s decision to cut its supply to the EU by 60% to 31 million doses for the first quarter of the year, while Pfizer has also altered delivery schedules.

Britain's Health Minister Matt Hancock said the U.K will be able to work with the European Union to ensure there is no disruption to vaccine supplies, arguing protectionism was not right during a pandemic. The European Commission later said it had no plans to impose an export ban, explaining its proposal would require firms to register vaccine exports. AstraZeneca has a domestic British supply chain to make its vaccine, but Britain’s supplies of the Pfizer vaccine come from a factory in Belgium.

Preliminary estimates show U.S. President Joe Biden’s proposed $1.9 trillion economic stimulus package could boost U.S. economic output by 5% over the next three years, the chief economist of the International Monetary Fund said on Tuesday.

• On Wednesday, a statement from the City of London, said London’s loss of some financial business due to Brexit has not been catastrophic and financial capital will thrive even if the European Union “irrationally” blocks access. “It’s disappointing to lose business, but it’s not at all catastrophic,” Catherine McGuinness, who is the political leader of the ancient financial district’s ruling body, the City of London Corporation, told Reuters.

“We are very confident in London’s basic strengths and that we will make up business elsewhere,” McGuinness said. “No matter what happens, London will continue to thrive.” The City, McGuinness said, neither wanted nor expected Prime Minister Boris Johnson’s government to light “a bonfire of regulations”. Still, a global financial capital the size of London could not be a “rule taker”, she said. London’s Brexit job losses so far to the EU were around 7,500, McGuinness said, still at the low end of the range predicted in 2016, that London could shed 65,000 to 75,000 jobs in a sector that employs a million people. New York retained the top spot in a survey of global financial centres published in September by Global Financial Centres Index, with London strengthening its position in second.

Figures out on Wednesday, showed that China is paying a heavy toll for its efforts to punish Australia by banning or restricting certain commodity imports, while conversely Australia seems to have avoided any serious financial ramifications so far. It is perhaps surprising that the authorities in Beijing, having witnessed how the trade war launched by former U.S. President Donald Trump backfired on his own country, would be keen to try the same thing on Australia.

England’s Lockdown measures will remain in place until at least 8th March, Boris Johnson announced Wednesday. The Prime Minister earmarked the date as the earliest possible time schools could reopen, confirming that hopes of pupils returning to class after the February half-term have been abandoned. He said “other economic and social restrictions” won’t be eased until then. The government will set out a roadmap for lifting lockdown in the week beginning 22nd February.

• Figures released on Thursday, showed that for the first time last year, most of the robots ordered by companies in North America weren’t destined for automotive factories. The shift is part of a long-term trend of automation spreading into more corners of the economy, which was accelerated by the COVID-19 pandemic. Online retailers have scrambled to expand capacity as more people buy goods online, while food and other types of factories have seen automation as a tool to keep lines running and workers safely separated.

• On Friday, AstraZeneca offered eight million more doses of its COVID-19 vaccine to the European Union to try to defuse a row over supplies, but the bloc said that was too far short of what was originally promised, an EU official told Reuters. To make up for the shortfall caused by problems at a factory in Belgium, EU officials asked AstraZeneca to re-route to the bloc, some of the doses it manufactures in Britain.

Also on Friday, a new Coronavirus vaccine has been shown to be 89.3% effective in large-scale UK trials. The Novavax jab is the first to show in trials that it is effective against the new virus variant found in the UK, the BBC's medical editor Fergus Walsh said. The UK has secured 60 million doses of the jab, which will be made in Stockton-on-Tees in north-east England. The doses are expected to be delivered in the second half of this year, if approved for use by the Medicines and Healthcare Products Regulatory Agency (MHRA), the government said.

Johnson & Johnson said on Friday that its single-dose vaccine was 66% effective in preventing COVID-19 in a large trial against multiple variants across three continents. J&J’s main goal was the prevention of moderate to severe COVID-19, and the vaccine was 85% effective in stopping severe disease and preventing hospitalization across all geographies and against multiple variants 28 days after immunization. There were no deaths amongst those receiving the vaccine.

• Over the week, the main Global Stockmarkets were quite heavily down. This was due to adverse trading patterns driven by social media and tensions over vaccine supplies, which sparked some rounds of profit taking after recent rallies. The investment D-PIMS Portfolios were inevitably down over the week, especially the higher risk Portfolios. They were helped by their UK domestic allocations.

 

The value of investments and the income from them can fall as well as rise and you may not get back the original amount you invested.


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.


 

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