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D-PIMS Weekly Market Update - Week of 31st May to 6th June 2021

Today’s weekly Update:

Over the course of the last week, shortened by the Bank Holiday, headlines were mostly economic related:

• Figures out on Tuesday from Nationwide Building Society, showed that U.K. house prices recorded double-digit growth for the first time since 2014 last month, as the nation’s booming market showed no signs of cooling. Prices climbed 10.9% from a year earlier, with the lender saying the increase has been driven by buyers shifting their preferences in the wake of the pandemic. On the month, prices rose 1.8%, double the pace economists had expected.

In an interview with the Guardian Tuesday, Bank of England Deputy Governor Dave Ramsden said the institution is carefully monitoring the U.K.’s booming housing market, as it weighs the possibility that a rapid recovery from the pandemic will lead to sustained inflation.

A deluge of new orders helped to drive a record increase in British manufacturing activity last month as the economy began to recover from the COVID-19 pandemic, a survey showed on Tuesday. The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) rose to 65.6 in May from 60.9 in April. This marked the highest level since the survey started in 1992. The index levels represent the pace and breadth of growth rather than the amount of output, however, and the sector likely has some way to go to get back to where it was before the lockdown.

• Member nations of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Wednesday officially agreed to allow the United Kingdom to start the process of joining the pact, Japan's economy minister said. The Japanese Economy Minister Yasutoshi Nishimura told reporters he welcomed the start of Britain's joining process, after hosting an online meeting of ministers from the 11 countries that make up the trans-Pacific trade pact. The United Kingdom's admission into CPTPP would bring the nominal gross domestic product of the zone covered by the pact, almost on par with that of the European Union. The CPTPP removes 95% of tariffs between its members: Japan, Canada, Australia, Vietnam, New Zealand, Singapore, Mexico, Peru, Brunei, Chile and Malaysia. Unlike the EU, it does not aim to create a single market or a customs union, and it does not seek wider political integration.

Chinese Vice Premier Liu He exchanged views with U.S. Treasury Secretary Janet Yellen on issues of mutual “concern”, in his second virtual call in a week with top economic and trade officials under the U.S. Biden administration. China's increased engagement between the trade and economic chiefs of the world's largest economy, since Joe Biden took office in January, comes as the U.S. administration criticises Beijing on human rights abuses and seeks to rally other rich nations to form a united front on China.

• Britain and Australia held another round of talks to progress a free trade deal, the British envoy said on Thursday, as both countries seek to strike an agreement in mid-June. Britain is pursuing a deal with Australia as one of the pillars of its post-Brexit strategy to build stronger commercial and diplomatic links in the Indo-Pacific region. The proposed deal with Australia is the most advanced of several deals being pursued by London.

Britain's services sector recorded the biggest jump in activity in 24 years last month, after pubs and restaurants were allowed to resume serving customers indoors following months of lockdown, according to a closely watched business survey. Thursday's data adds to signs that Britain is enjoying a very rapid initial rebound as lockdown rules relax. The IHS Markit/CIPS Purchasing Managers' Index rose to 62.9 in May from 61.0 in April, taking it to its highest rate since May 1997 and above an initial estimate of 61.8.

• Finance ministers from the G7 group of rich nations met in London on Friday for two days of talks aimed at moving closer to a global deal to raise more tax from the likes of Google, Facebook and Amazon. The gathering, chaired by British finance minister Rishi Sunak, will be the first time all seven ministers will meet face-to-face since the start of the coronavirus pandemic. The group reached a landmark global deal on Saturday to set a minimum global corporate tax rate of at least 15%.

British employers took on permanent staff last month at the fastest rate since records started being kept in the late 1990s, a survey showed on Friday, in another sign that the economy is rebounding swiftly from the COVID-19 pandemic. Growth in temporary staff placements also hit a six-year high, according to the Recruitment and Employment Confederation (REC) trade body and accountants KPMG.

Britain has clinched post-Brexit trade agreements with Norway, Iceland and Liechtenstein as it seeks to forge new global trading relationships after leaving the European Union. The three nations, which are part of the European Economic Area, allowing them access to the single market, have relied on temporary trade arrangements with Britain since the end of a Brexit transition period on 31st December. Under the deal with Norway, import tariffs on Norwegian fish and seafood, its second-largest industry after oil and gas production, would be reduced, with no tariffs due on white fish, such as cod - a benefit for the fish processing industry in the north of England.

• Over the week, the main Global Stockmarkets were mostly up, but some Far Eastern Markets were down. The investment D-PIMS Portfolios were all up for the week. They were helped by their diverse allocations.


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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.