As we start yet another week of our climb out of lockdown, there is no doubt in my mind that this glorious, prolonged bout of excellent weather has helped us all enormously. Yes, it has brought some inappropriate gatherings with all of the possible consequences of this, but at least many of us can get out and about and enjoy the parts of our lives which we are allowed to and makes even a simple walk in the countryside an enjoyable experience.
Enough reflection, on with the business end of things; so what’s happening today and for the rest of this week in the political and investment sphere?
Well it’s a steady and somewhat negative start to the week, in spite of the positive news that the UK has secured upwards of 90 million doses of potential vaccines against the Covid virus. Yes, they are still in testing phase and yes, this will come at a price in terms of financial assistance with the research and development phases with no certainty of a positive outcome, but needs must.
So why the negative start in sharemarkets? Well first and foremost we are now starting to see the impact of the lockdown on company workforce numbers with a cascade of job losses although this has, to a large degree, been factored into the picture already; secondly we have the EU summit which has been going on this weekend with the aim of trying to thrash out an agreement for a financial stimulus package for member states of around 750 billion euros, the stumbling block to which seems to be the amount which will be earmarked for direct grant support as opposed to cheap loans, with some member states feeling that the figure of 500 billion euros is just too high. Whilst the markets expect a solution, the nervousness which we are seeing today is a reflection of the fear that the ‘deal’ may yet fall apart.
What else is happening to affect investment markets? Well, across in the United States, apart from the continuing increase in cases of the virus in some states, this week will see many leading companies across all sectors reporting their financial figures and again, there is a nervousness about how this will look. Last week we saw some US banks and other companies reporting positive growth over the past few months, but I think it is important to bear in mind that the US seems to be slightly behind the curve in terms of the virus and perhaps it is the next 3 months which will be more of a talking point. Again, when they sneeze, we catch a cold (apologies for the inappropriate analogy), so it is important for our own investment markets that the US have a good recovery also.
In the UK, it is actually a quieter week for financial reporting but I am sure we will hear from some companies about their restructuring plans, not least Marks and Spencer and there is of course the focus on Brexit negotiations again, for better or worse.
In terms of good news, there is the fact that we have not reported a spike in covid cases since lockdown started to ease in the UK, although I am not sure that the numbers we are given are that accurate anyway, but we take what we get and so this has to be believed.
With a final (?) easing of the lockdown commencing from next weekend, whilst our lives will hopefully start to return to a semblance of normality and I can at last look forward to being able to visit many of you again, it is to be hoped that we can, as a nation, continue to maintain our discipline and keep the rate of infection on a decline, in the hope of getting the economy back and running and also to allow more time for a successful vaccine to be rolled-out.