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D-PIMS Weekly Market Update - Week of 2nd to 8h August 2021

Today’s Monday Update:

Over the course of the last week, headlines were mostly Coronavirus and climate change related:

• Britain reopened its borders to large parts of the world on Monday, scrapping quarantine for fully vaccinated arrivals from the European Union and the United States, in a boost for airlines and travel companies brought to their knees by the pandemic.

England's COVID-19 mobile phone app will be tweaked so that fewer contacts of asymptomatic people who test positive for the disease will need to self-isolate, Britain's health ministry said on Monday. Business leaders have raised concerns about the numbers of staff who are having to self-isolate after being "pinged" by the app when they come into contact with someone who then tests positive for COVID-19. Under the change, if someone tests positive but is asymptomatic, the app will look for their close contacts in the two days prior to the positive test, rather than looking for the contacts of the positive person in the five days before the test. The health ministry said that the change would reduce the number of notifications sent by the app, but would not reduce the app's sensitivity, and it would still catch the same number of high-risk contacts.

• Takeovers of British companies hit a 14-year high by value in the first seven months of 2021, Refinitiv data out on Tuesday showed, with no sign the buying spree is slowing after U.S. companies targeted a leading supermarket and defence groups. The increase has coincided with the British economy's faster than expected rebound from the coronavirus crisis and reduced Brexit uncertainty since leaving the European Union. British companies have been relatively cheap compared with U.S rivals when measured on a price-to-earnings ratio, with the FTSE 100 trading at 15.6x earnings against 26.9 for the S&P 500, Refinitiv data shows. The FTSE 250 index of mid-cap companies is trading at 9.9 times.

• Britain will offer all 16 and 17 year olds their first dose of Pfizer (PFE.N) COVID-19 vaccine, Britain's vaccine advisers said on Wednesday, extending eligibility of the shots to children beyond the clinically vulnerable. Britain's Joint Committee on Vaccination and Immunisation (JCVI) said it was updating initial advice given last month in light changes in the spread of the disease in younger groups, and the latest safety data that was available. "After carefully considering the latest data, we advise that healthy 16 to 17-year-olds are offered a first dose of Pfizer-BioNTech vaccine. Advice on when to offer the second vaccine dose will come later" said Wei Shen Lim, the JCVI's COVID-19 Chair.

Britain has been granted "dialogue partner" status by the Association of Southeast Asian Nations (ASEAN) a step forward in London's push to build stronger diplomatic ties in Asia following its exit from the European Union. ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The group has close diplomatic relations with other world powers including the EU, the United States and China, and is seen by many as an important forum for discussion of geopolitical issues. Becoming a dialogue partner gives Britain high-level access to ASEAN summits. The British government hopes it will also spur deeper practical cooperation on issues like climate change and regional stability.

• The government announce on Thursday, that Britain will scrap quarantine for fully-vaccinated travellers returning to England and Scotland from France, rowing back on a rule that had infuriated French politicians and thrown millions of holidays into confusion. Britain's transport minister, Grant Shapps, said the easing of the rules would ease pressure on the struggling travel industry and give sun seekers a chance to meet up with friends and family. Austria, Germany, Slovenia, Slovakia, Latvia, Romania and Norway will all be added to England's green list for low-risk travel from Aug. 8, the government said, meaning that arrivals into England from those places do not have to self-isolate whether they are fully vaccinated or not.

The Bank of England said on Thursday it could see a modest reduction ahead in the huge support it has provided to Britain's economy during the COVID-19 pandemic and set out how it could gradually tighten monetary policy. For now, the central bank decided to keep its stimulus at full speed, even though it expects inflation to jump to 4.0% around the end of the year. With more than 70% of adults in Britain now fully vaccinated against COVID-19 and most social-distancing rules lifted, Britain's economy has recouped much of its 10% crash of 2020. This has prompted the BoE, like other central banks around the world, to spell out how it eventually plans to rein in its stimulus. The BoE's rate-setting committee said "some modest tightening" of monetary policy over its three-year forecast period was likely to be necessary. It said it would start reducing its stock of bonds when its policy rate reaches 0.5% by not reinvesting the proceeds of maturing debt, as long as that made sense for the economy. Markets have priced in BoE rates reaching that level only in late 2023 or early 2024, after a first rate rise to 0.25% around August next year.

• Over the week, the main Global Stockmarkets were positive, with some up more than others. All of the investment D-PIMS Portfolios were up, especially the higher risk Portfolios. They were helped by their domestic UK and domestic China allocations.