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D-PIMS Weekly Market Update - Week of 27th July to 2nd August 2020

Today’s Monday Update:

Over the last week, most news was focused on either the economy or the Coronavirus:

• There were reports on Monday that the European Union’s Brexit negotiator Michel Barnier, expressed confidence at a closed-door meeting with national envoys to the bloc that a new deal with Britain was possible, diplomatic sources told Reuters.

Barnier’s comments came after the latest round of EU-UK negotiations the previous week, and stood in sharp contrast with the downbeat assessment he delivered publicly, in saying that London’s rigid positions on fisheries and the level playing field guarantees of fair competition meant a deal was “unlikely” for now. This further highlighted that the internal EU analysis of the Brexit process may be more sanguine than some officials have suggested in public. Barnier’s comments were echoed by Ireland and the Netherlands, according to the sources, who are familiar with the discussions.

• Anyone who tests positive or shows symptoms for COVID-19 in Britain will have to self-isolate for 10 days instead of the previous seven, based on a low but tangible possibility that people could remain infectious for longer. The government said on Thursday that the change in the rule would come into force immediately.

The Health Secretary Matt Hancock, said the British authorities were working on possible ways to shorten the quarantine period for people coming from Spain, but no change was imminent. “We are working on whether by testing people during the quarantine period, it is safe to then be able to release them earlier, but we are not imminently making an announcement on it,” he said in a BBC television interview.

• Britain’s AstraZeneca said on Thursday that good data was coming in so far on its vaccine for COVID-19, already in large-scale human trials and widely seen as the front-runner in the race for a shot against the novel coronavirus. “The vaccine development is progressing well. We have had good data so far. We need to show the efficacy in the clinical programme, but so far, so good,” Chief Executive Pascal Soriot said on a media call. AstraZeneca has already reached deals with countries to make more than 2 billion doses of its COVID-19 vaccine, developed in partnership with the University of Oxford, and says it could be approved by the end of this year.

• Johnson & Johnson on Thursday kicked off U.S. human safety trials for its COVID-19 vaccine after releasing details of a study in monkeys that showed its best-performing vaccine candidate offered strong protection in a single dose. When exposed to the virus, none of the animals had virus in their lungs and only one showed low levels of virus in nasal swabs. Lab tests showed they all had developed antibodies capable of neutralizing the virus after a single shot, according to the study published in the journal Nature.

The drugmaker said it had started early-stage human trials in the United States and Belgium and would test its vaccine candidate in over 1,000 healthy adults aged 18 to 55 years, as well as adults aged 65 years and older.

• President Donald Trump on Thursday raised the idea of delaying the 3rd November U.S. elections, an idea immediately rejected by both Democrats and his fellow Republicans in Congress - the sole branch of government with the authority to make such a change.

Critics and even Trump’s allies dismissed the notion as an unserious attempt to distract from poor economic news, but some legal experts warned that his repeated attacks could undermine his supporters’ faith in the election process. Trump, who opinion polls show trailing Democratic challenger and former Vice President Joe Biden, said he would not trust the results of an election that included widespread mail voting - a measure that many observers see as critical given the coronavirus pandemic. Without evidence, he claimed that ramped up mail voting would be rife with fraud, but praised absentee voting, which is also done by mail.

• On Friday, Britain re-imposed some lockdown measures in swathes of northern England after a rise in the rate of novel coronavirus transmission. Around 4 million people were ordered not to mix with other households in Greater Manchester, parts of West Yorkshire and East Lancashire, though they can still go to the pub and to work.

Official data showed 846 new positive tests in Britain - the highest number of daily infections since June 28. “The problem with this virus is that it thrives on the social contact which makes life worth living,” Health Secretary Matt Hancock told Sky. “I totally understand the human impact of this but unfortunately that is how the virus passes on.” Asked by the BBC if the UK was now entering a second wave, Hancock said: “It is not yet, and we are absolutely determined to take the action that is needed.”

People in the areas affected were told not to socialise with other households at home or in gardens, or to meet with other households in pubs, restaurants, cafes, shops, places of worship or leisure venues. People are however allowed to attend a pub, church or mosque with members of their own household.

Later on Friday, Boris Johnson announced that the planned reopening of bowling alleys and casinos would now be cancelled, amid fears of a second wave of coronavirus.
The changes, which were due to come into effect from Saturday 1st August, would also have seen ice rinks welcome back customers in England but have now been shelved.
Indoor performances, weddings of parties up to 30, and pilots of outdoor sports events with spectators - which were all planned to go ahead from 1st August - are all postponed until 15 August. Face coverings, already mandatory for shoppers, will also have to be worn in indoor spaces where people come into contact with others they don’t know from 8th August. This includes museums and places of worship

British house prices jumped by the most in 11 years this month, reversing about half their losses due to the impact of COVID-19 on a surge in pent-up demand, figures from mortgage lender Nationwide showed on Friday. Average prices rose 1.7% in July, the biggest single-month increase since August 2009, after dropping by 1.6% in June and 1.7% in May. Compared with a year ago, house prices are 1.5% higher, though they are 1.6% lower than in April. House prices were picking up at the start of the year before the pandemic, and Nationwide said a temporary cut to property purchase taxes by finance minister Rishi Sunak would push up prices further in the short term.

• Over the week, the main Global Stockmarket indices were mostly well down, particularly after taking the Pounds rise into account. This was mainly due to continuing worries over the surging number of virus cases in the US and the deteriorating relations between the US and China. The investment D-PIMS Portfolios were down, although much less than Markets. They were helped by their diverse exposure and currency hedging in some of the holdings.

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.