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D-PIMS Weekly Market Update - Week of 4th to 10th May 2020

Today’s Monday Update:

Over the last week, most news was once again Coronavirus related:

• On Monday researchers from the University of Bonn concluded from a field trial, that more than 10 times as many people in Germany have likely been infected with the coronavirus than the number of official confirmed cases.

• The United States and Britain launched trade negotiations by videoconference on Tuesday. The talks are Washington’s first major new trade negotiation in 2020, and take place at the same time as London works out trade terms with the EU, with a year-end deadline.

UK stock markets headed higher on Tuesday as investors counted on a revival in economic activity, with several countries beginning to ease coronavirus-induced restrictions.

The FTSE 100 has now recovered about 19% from the low in March, partly on historic global fiscal and monetary stimulus, and has also shrugged off mounting evidence of the COVID-19 pandemic’s economic damage.

• On Wednesday the Times newspaper reported that the United Kingdom had drawn up a three-stage plan to ease the coronavirus lockdown that was first imposed at the end of March. The Government must review the lockdown by 7th May, but the Prime Minister is not due to make any announcement until Sunday 10th March.

• World shares rose on Thursday after Chinese exports proved far stronger than expected. Beijing reported a 3.5% rise in exports in April from a year earlier, confounding expectations of a 15.1% fall and outweighing a 14.2% drop in imports. The unexpectedly strong showing boosted speculation China could recover from its coronavirus lockdown quicker than expected and support global growth in the process.

Initial U.S. jobless claims for state unemployment benefits totalled a seasonally adjusted 3.169 million for the week ended 2nd May, down from a revised 3.846 million in the prior week, the Labor Department’s weekly jobless claims report showed. The data implied that the pace of claims is slowing down, which provided markets with some optimism that it may be bottoming out.

• On Sunday Prime Minister Boris Johnson announced there would be no immediate end to the lockdown in Britain, but he outlined plans to begin gradually easing some of the measures which have shut down much of the economy for nearly seven weeks. Further details were due to be announced to parliament on Monday:

The government is replacing its main “stay at home” slogan with “stay alert”. However, people were will still told to stay at home as much as possible. Johnson said those who can work from home should continue to do so, but anyone who cannot, such as those working in construction and manufacturing, “should be actively encouraged to go to work”. The requirement for buses, trains and underground rail services to maintain social distancing rules means they will only be able to carry vastly reduced passenger numbers, with public transport capacity expected to drop by around 90%. Johnson urged those returning to commuting to consider cycling, walking or driving to work instead.

From Wednesday, people will be allowed to take unlimited amounts of outdoor exercise, sit in the sun in a local park, drive to other destinations and play sports, such as golf, tennis or angling, but only with members of their household.

Johnson said that at the earliest by 1st June, Britain might be in a position to begin the phased reopening of shops and to get primary pupils back into schools, in stages, beginning with the youngest and oldest year groups. Other year classes and secondary schools are not expected to return to school before the summer holidays.

At the earliest by 1st July and only if the numbers on infection rates support it, Johnson said there could be the re-opening of at least some of the hospitality industry and other public places, provided they are safe and enforce social distancing. Some of the hospitality industry could include restaurants or cafes with outside seating and public places could include places of worship.

Johnson said the government was establishing a new Covid Alert System run by a new Joint Biosecurity Centre. The Covid Alert Level will be determined primarily by the reproduction rate of the disease, or R, and the number of coronavirus cases. There will be five alert levels. Level One means the disease is no longer present in Britain and Level Five is the most critical and will be used to flag the risk in different areas, allowing the government to tighten restrictions where necessary.

Johnson also said to prevent re-infection from abroad “it will soon be the time to impose quarantine on people coming into this country by air.” In a joint statement issued following a conversation between Johnson and French President Emmanuel Macron, France and Britain said no quarantine measures would apply to travellers coming from France for now and “any measures on either side would be taken in a concerted and reciprocal manner”.

• Over the week, the main Global Stockmarket indices were mainly up with the notable exception of the Hang Seng. The D-PIMS Portfolios were mostly in positive territory, especially higher risk Portfolios.

 

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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.


 

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