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D-PIMS Weekly Market Update - Week of 29th June to 5th July 2020

Today’s Monday Update:

Over the last week, most news was either Coronavirus or economic related:

• On Monday, Britain’s debt office said it plans to sell a record £275 billion of government debt between April and August to pay for the huge spending response to the coronavirus pandemic, more than double the amount sold in the whole previous financial year.

Negotiators from the UK and European Union (EU) were meeting face to face in an effort to intensify talks on a post-Brexit trade deal. Teams led by the Prime Minister’s Europe adviser David Frost and the EU’s Michel Barnier were meeting in Brussels for the first time since the coronavirus crisis forced talks to be held remotely.

• On Tuesday, the Government imposed a stringent lockdown on the city of Leicester following a local flare-up of coronavirus. In Leicester, the seven-day infection rate was 135 cases per 100,000 people, three times higher than the next highest city. Leicester accounted for 10% of all positive cases in England in the previous week, the government said.

Prime Minister Boris Johnson promised a “Rooseveltian” boost to public spending to help the country’s economy recover from the coronavirus shock and said a return to austerity would be a mistake. He unveiled new planning rules, an "infrastructure revolution", more house building and a 10-year rebuilding programme for schools in England, as part of government efforts to help Britain “bounce back” from the coronavirus crisis. Former U.S. President Franklin D. Roosevelt’s “New Deal” programme, which included a raft of job-creating public works projects, helped the United States recover from the Great Depression.

China’s parliament passed national security legislation for Hong Kong on Tuesday, setting the stage for the most radical changes to the former British colony’s way of life since it returned to Chinese rule 23 years ago. The United States, already in dispute with China over trade, the South China Sea and the novel coronavirus, began eliminating Hong Kong’s special status under U.S. law, halting defense exports and restricting technology access. Authorities in Beijing and Hong Kong have repeatedly said the legislation is aimed at a few “troublemakers” and will not affect rights and freedoms, nor investor interests.

Confidence among British businesses improved in June for the first time since January ahead of the latest relaxation of the country’s coronavirus lockdown, according to a survey published by Lloyds Bank on Tuesday.

• On Wednesday, economic activity in the US' manufacturing sector expanded in June with the ISM's Manufacturing Purchasing Managers' Index (PMI) improving to 52.6 in June from 43.1 in May. This reading came in better than the market expectation of 49.5. The closely watched measure of U.S. manufacturing jumped to the highest in more than a year, signalling the resumption of growth as pandemic-related lockdowns ended.

• The United Kingdom said on Thursday, that China’s imposition of a security law on Hong Kong was a “clear and serious” violation of the 1984 Joint Declaration and that London would offer around 3 million residents of the former colony a path to British citizenship. China said on Thursday that Britain would bear all the consequences for any move it took to offer Hong Kong citizens a path to settlement in the UK. China reserved the right to act against Britain over the issue, foreign ministry spokesman Zhao Lijian told a daily briefing, without specifying what countermeasures Beijing might take.

• England’s coronavirus quarantine rules for more than 50 countries including Germany, France, Spain and Italy is to end, the British government said on Friday, allowing millions of holidaymakers to head to Europe’s beaches for a summer break. From 10th July passengers visiting places viewed as low risk will not need to self-isolate when they return, while those from higher risk countries will have to quarantine for 14-days under a rule which has infuriated airlines and the travel industry.

The government said it expected countries included on the quarantine-free list for England would reciprocate by relaxing their own travel restrictions.

Britain said it would still require all travellers, except those from the exempted countries, to provide their contact information including their travel history on arrival. People who have been in or transited through non-exempt countries will still have to self-isolate for 14 days, these currently include the United States and Portugal.

South Korea’s President Moon Jae-in on Friday appointed officials known for advocating inter-Korean engagement as chiefs of national security, intelligence and unification policy in a bid to revive relations and stalled projects with North Korea. The shake-up of top security officials came as Moon seeks to cement progress in inter-Korean relations as his major legacy during his final two years in office, by restarting diplomatic exchanges and economic initiatives dogged by international sanctions imposed over the North’s nuclear and missile programmes.

North Korea has rejected the idea that South Korea can play mediator, but Moon has vowed to continue playing a bridging role between Kim and Trump, and this week called for the two leaders to meet again before the U.S. presidential election in November. The U.S. Deputy Secretary of State Stephen Biegun, was due to visit South Korea in the next week for meetings with his South Korean counterparts.

• Over the week, the main Global Stockmarket indices were up, apart from the Nikkei 225 in Japan. Correspondingly the investment D-PIMS Portfolios all moved higher a higher, especially the higher risk Portfolios. They were helped by their diverse exposure.

 

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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