As the virus takes its grip again and headless chickens prevail in the corridors of power, I have found it difficult to be able to write anything which is particularly helpful in guiding anyone over the last week or so.
However, today the sun is out, the UK share index is sharply up and I can still touch my toes (well just about), so onwards and upwards.
The reason for the rise in the UK share index is due largely to Asian markets showing increasing signs of returning to strong productivity and profitability (hooray for them!), something I touched upon with the Chinese economy in a recent blog. There is also an increasing expectation that the United States Federal Reserve may bring forward a further stimulus package for their economy this week, all good for global trading, but what about here in the UK?
Well much as it feels good to bathe in the reflected glory of overseas news, the stark reality is that our own share index (FTSE100) is still down by around 20% from March this year, lagging behind our European neighbours and, for that matter even Brazil! Why? well, there is Brexit I guess, but that’s the same for Europe also; I think the reality is that many of our larger companies continue to struggle with the changes in conditions which have been forced upon them and, of course, this has a ripple effect through suppliers and into the wider economy.
The news of a new wage support scheme for Employers was outlined last week, which will run on similar lines to schemes which have already been put in place for the coming year or so within certain European countries. However, with the Employer being asked to fund up to 2/3rds of employees’ salaries and with a relatively short lifespan for the scheme, I feel that many companies will already have made their minds up about how they see there short-term futures.
I prefer to try and steer clear of political views within my blogs, but it is certainly becoming increasingly frustrating to see the UK falling further behind the curve. There appears to be increasing unrest within the governing party and its MP’s as to how to manage the economy right now (lockdown or no lockdown, Deal or No Deal Brexit, etc) and this is worrying.
However, if investment markets see positives in terms of share prices and other financial instruments, then I will gladly take that at the moment.
Whatever the landscape currently (and I don’t think any of us can predict the timeline for ending the perpetuation of this virus), markets do think further ahead and let’s just hope they continue to find positives, as we have a long way still to go!
If there are any subject areas that anyone would like to see covered within future blogs (whether of a technical nature or otherwise), please e-mail me on steve@jenkinsfinancial.co.uk and I will try and cover these.