Welcome once again to our weekly client update. It was a week overshadowed by the row over Dominic Cummings, the Prime Minister’s special adviser, and his trip to County Durham during lockdown. As we’ll see below, though, there were far more important long-term issues than one man’s test drive to Barnard Castle.

As always, the stock market figures we quote were correct at close of business in the relevant market on Wednesday evening. The commentary was written on Thursday morning and afternoon, and then finally revised after the Government’s briefing on Thursday evening.

The Latest News

This week brought significant easing of the lockdown in Europe and the news that all ‘non-essential’ shops in the UK will be open by the middle of June. We will have to wait rather longer to eat out or have our hair cut, but on Thursday evening the Prime Minister announced that from Monday up to six people can meet outside, providing those from different households observe social distancing.

The really big news was in China, where the parliament backed a new security law for Hong Kong, making it a crime to undermine Beijing’s authority in the territory. One pro-democracy legislator in Hong Kong said, “Hong Kong as we knew it is effectively dead.” The new law could see China install its own security agencies in Hong Kong for the first time. Western governments have, predictably, made vociferous protests. 

In the UK, it was reported that Government borrowing has shot up to levels last seen in the 1950s – little surprise with the furlough scheme now covering 8.4m workers.

Companies are undoubtedly going to face difficulties as the furlough scheme winds down and they have to start paying part of employees’ wages again. Most economists now seem to accept that a ‘V-shaped’ recovery from the crisis is unlikely.

This, sadly, was the week when some of the threatened job cuts became a reality, with EasyJet saying it will cut “thousands” of jobs and, across the Atlantic, nearly 40m Americans now receiving unemployment benefit.

China, having met or exceeded its economic growth target every year since records began in 1990, formally announced that this year there will be no growth target.

It was another week when rescue packages were in plentiful supply. “This is Europe’s moment,” declared EU Commission President Ursula von der Leyen, as she proposed a rescue package worth €750bn (£670bn) to tackle an “unprecedented crisis.” It will be made up of grants and loans for every EU member state and – as we report below – the news was warmly welcomed by Europe’s stock markets.

On a smaller scale, France was planning an €8bn (£7.2bn) rescue package for its car industry, and Lufthansa agreed a €9bn (£8.1bn) package with the German government – a move promptly branded illegal by Ryanair boss Michael O’Leary.

In the UK, the Government gave a clear indication that it was prepared to rescue ‘key British companies’ and – perhaps the best news of all – Spain announced it would stop quarantining foreign visitors from 1^st July.

The Stock Markets

On the whole, the news from the world’s stock markets was good this week, with three major markets – the US, Japan and Germany – making significant gains. All the leading European markets responded positively to the rescue package we mentioned above, and the German, French and Italian indices were all up 4% in the week, the German DAX index closing at 11,658.

The US Dow Jones index was up by a similar amount to 25,548 while in the UK, the FTSE 100 index of leading shares rose 1% to close Wednesday at 6,114.

In the Far East, Japan’s Nikkei Dow index was up to 21,419 while the South Korean index rose 2% in the week. But both China’s Shanghai Composite index and the Hang Seng index in Hong Kong were – perhaps unsurprisingly – down in the week. The Shanghai Composite was down 2% to 2,837 while the Hong Kong market fell 5% to end the week at 23,301.

The pound had another uneventful week, closing Wednesday at $1.2252 – unchanged in percentage terms for the second week in a row.

Our Thoughts

It has been another week with the usual mixture of good and bad news – as long as this crisis continues, there will always be good and bad news.

By far the most worrying was the news coming out of China: as we wrote last week, the world’s recovery will not be helped by a succession of trade disputes and you cannot think that heavy-handed action in Hong Kong will improve China’s standing in the world. We can only wait and see what develops…

We are, though, heartened by the determined efforts to get economies around the world up and running again. We may not see a V-shaped recovery in the UK, but we will unquestionably see a recovery. We are in no doubt of that.

Before we move on to rather lighter events, we should perhaps end with a word of caution. This crisis seems to have quickly divided people into ‘good guys’ and ‘bad guys.’ The bad guys have been out in force, with a series of scams ranging from offering to go shopping for vulnerable people (and disappearing with the cash) to sophisticated frauds targeting major companies.

We would urge all our clients to be extra vigilant at this time. The old adage – if it seems too good to be true, it is too good to be true – has never been more relevant.

And now on to the baby names section of the update.

Two weeks ago, we brought you the news that Tesla boss Elon Musk and his partner, the Canadian singer, Grimes, had christened their new son X Æ A-12 (pronounced X-Ash-A12).

Subsequently it emerged that in California you cannot give a child a name containing a number – presumably so you can tell which is your child’s name and which is your password – so the little chap has been renamed. Welcome to the world, X Æ A-Xii

Also unsuccessful, but on a far more prosaic scale, were two burglars who broke into the Wetherspoon’s pub at Liverpool Lime Street station. Breaking into a pub during lockdown probably wasn’t the most sensible idea and, having tripped the alarm, the pair were duly arrested – with just three packets of peanuts stashed in their pockets.

Finally, many of us have bitten the bullet and cleared out our wardrobes during lockdown – so much so that charity shops are fearing a “deluge of donations” when they re-open. Robin Osterley, chief executive of the Charity Retail Association, has urged people to be ‘thoughtful’ about what they donate.

Welcome to our latest client update, in another week which brought the usual mixture of good and bad news.

As usual, the stock market figures we quote below were correct at the close of business in the relevant market on Wednesday, while the commentary was written on Thursday morning and then revised after the Government’s daily briefing on Thursday evening.

The Latest News

As you will see below, the majority of stock markets we monitor for the update had a good week.

Perhaps the big story this week – especially if we look to the long-term – was one that went largely unreported. The US Senate has passed a bill which could lead to the de-listing of Chinese firms in the US. Meanwhile, trade tensions between China and Australia continue to escalate, as both sides accuse the other of insults.

There is unquestionably going to be a reckoning for this pandemic. We see no prospect at all of China handing over billions of dollars in ‘reparations,’ but the economic recovery could well be hampered by these simmering tensions, especially if they spill over into trade disputes and tariffs.

What of the week’s other bad news? Sadly, Rolls-Royce is cutting 9,000 jobs, and one in four US workers is now claiming unemployment benefit. Chancellor Rishi Sunak has said that the UK cannot count on an automatic ‘V-shaped’ recovery from the crisis, warning the country could face “a severe recession.”

And Marks and Spencer have cautioned us that, “shopping may never be the same again.” As we order more and more from Amazon, we think most of us had already worked that out.

Having dispensed his portion of gloom, Rishi Sunak told the Commons that two million self-employed people have applied for government grants because their businesses have been hit by Coronavirus. The scheme should ensure that money is paid to them within six days and will hopefully see them much better placed when the economy starts to recover.

More good news came with the suggestion that Nissan is considering moving production of two new Renault models from Spain to its plant at Sunderland.

If we said last week that it was ‘good news’ the UK economy had only shrunk by 2% in the first quarter, then it seems churlish not to award the same accolade to Germany, where GDP fell by just 2.2% in the first three months of the year.

Angela Merkel and French President Emmanuel Macron are proposing a €500bn (£449bn) European recovery fund, with the money distributed as grants to those EU countries worst affected by the pandemic. The German leader had previously been against grants, so this represents a shift in her position.

The Stock Markets

As we wrote in the last update, normally the vast majority of the stock markets we monitor for the update move in step – be that up or down. Last week was an exception to the rule, with six markets rising and seven falling.

We’re pleased to say that normal service has been resumed – and in the right direction. Nearly all the markets were up this week, with some turning in excellent performances as hopes for an economic recovery from the virus strengthened.

Three markets were up by 6% in the week to Wednesday. The Dow Jones index in the US was up to 24,576: Germany’s DAX index rose to 11,224 and the Russian stock market closed at 2,771.

Here in the UK, the FTSE-100 index rose 3% over the week to finish at 6,067. France and South Korea were up by the same percentage. China’s Shanghai Composite index was rather more subdued and was unchanged in percentage terms at 2,884. The one market to fall was in India, where the stock market was down 4% at 30,819.

The pound had a quiet week against the dollar, finishing the week very slightly up – but unchanged in percentage terms – at $1.2237.

Our Thoughts

Another week with the usual mixture of good and bad news comes to an end and whatever the ‘new normal’ looks like, certain things will be irrevocably changed.

We’re already seeing new companies and new products emerge in response to the crisis. Someone making face masks at their kitchen table will not replace 9,000 jobs lost at Rolls-Royce, nor will a device we saw this week, which allows you to open doors and press buttons without coming into contact with them. But we need optimism and perspective. Rolls-Royce was founded in 1906: lockdown started on March 23^rd.

As we have written previously, we remain resolutely optimistic. There is a real determination to recover from this crisis – not just in the UK but around the world. We will continue to keep you updated, and remember we are never more than a phone call or an email away should you have any questions.

And now to the really important news…

When lockdown started there was a sudden dearth of amusing stories. Fortunately, the resilience (and madness) of the human spirit seems to have re-asserted itself, not least among the many people who apparently can only do their daily exercise in fancy dress.

One gentleman in Cardiff perhaps took it a shade too far when he went out dressed as a medieval knight with a three foot sword. Armed police were duly called, and Sir Lockdown was forced to lay down his sword. He later apologised for “an error of judgement.”

Social distancing also made the ‘alternative’ news this week.

The managers at Café & Konditorei Rothe in Schwerin, north east Germany, politely requested that their customers wear swimming pool ‘noodle hats’ to ensure social distancing. Essentially, you can have a coffee, but you need to drink it wearing a hat with three large foam ‘arms’ on it.

Pride of place though, goes to a seafood bar called Fish Tales, in Ocean City, Maryland. A hat? Nothing so ridiculous: customers at Fish Tales must wear a giant, inflatable ‘spare tyre’ supported on wheels if they want to have a drink.

Go ahead and Google it. It’s not just shopping that may never be the same again…

Welcome to our latest client update, in the week that saw the UK take its first steps towards easing the lockdown which has been in place since 23rd March.

This was a week with a lot of news, both good and bad, so we’ll get straight into the detail. As usual, the stock market figures quoted were correct at close of business in the relevant market on Wednesday evening. This commentary was written on Thursday morning, and then updated after the Government’s 5pm briefing.

The Latest News  

The main news this week was that the UK economy had only contracted by 2% in the first quarter of the year. We write ‘only’ as most experts were predicting a fall of around 2.5%. In a similar vein, the economy contracted by 5.8% in March, against an expected fall of 7.9%.

Clearly there are far worse figures to come in April – when the country was in lockdown for the whole month – but so far the UK is at least holding its own. The French economy, for example, contracted by 5.8% in the first quarter.

As expected, Sunday brought the Prime Minister’s statement and the first steps on the road to rebuilding the economy. This is going to be an enormous undertaking, and not just in the UK. In the US, 33m people have now lost their jobs, with the unemployment rate standing at 14.7%.

But that figure is dwarfed by unemployment in India with a reported 122m people – roughly twice the population of the UK – losing their jobs in April.

Unsurprisingly, consumer confidence has taken a battering: a major survey reported that it was “severely depressed” in the UK. Equally, despite all the Government initiatives, a third of small firms believe they are in imminent danger of collapse. Chancellor Rishi Sunak has conceded that the country will face a “significant recession.”

There is, though, plenty of good news and optimism to set against the gloom. The new Governor of the Bank of England, Andrew Bailey, is optimistic that the UK economy could bounce back quickly. In the Bank’s latest report, he talks of ‘huge rises, as the economy is put back to work.’

Certainly the Government continues to do everything it can, with the Chancellor extending the furlough scheme to October and support packages also now available for the self-employed. The housing market has been released from lockdown and this week will see Ford re-start production at its car manufacturing plants in Dagenham and Bridgend.

The Stock Markets

We monitor 13 world stock markets for the update: usually the vast majority move in step, be it up or down. This week, though, was mixed: six markets rose, seven fell – although, once again, in a narrow range. For the time being at least, we seem to have seen the end of the sharp fluctuations which marked our earlier updates.

The best performance this week came from Japan’s Nikkei Dow index, which rose 3% to 20,267. All the markets in the Far East were up – albeit by only small amounts – while the Indian stock market rose 2% to 32,009 as the government there launched a $264bn (£216bn) Coronavirus rescue package.

All the markets in Europe fell slightly during the week, with the exception of the UK’s FTSE 100 index, which rose 1% to close Wednesday at 5,904. America’s Dow Jones had a poor week as US/China tensions rose again: it fell 3% to 23,248.

The pound was down against the dollar during the week – but for those people who like to keep things simple it closed at $1.2222 where it was down (obviously) by 2%.

Our Thoughts

This week – more than any other since we started writing this update – the news has depended on your perception of it.

Yes, UK GDP fell in the first quarter but, compared to other countries, we did relatively well. Nevertheless, the BBC – and plenty more of the mainstream media – went with ‘UK economy shrinks at fastest pace since 2008.’

There are economists-a-plenty telling us that ‘the worst is yet to come’ and that the UK ‘is heading for the biggest crash in 300 years.’ Not for nothing is economics known as ‘the dismal science.’

The question is whether you side with the optimists – like the Governor of the Bank of England – or the pessimistic media. We are, and always have been, in the former camp. Our comment of a few weeks ago bears repeating: new companies will find new ways of bringing new products to new markets.

Of course the road out of lockdown will be bumpy. Despite all the calls for ‘certainty’, there can only be two certainties: a full lockdown at one end of the scale and a free-for-all at the other.

Anywhere between the two and there will be bumps in the road. But there is plenty of light at the end of the tunnel – not least the news today that Public Health England says that a new Coronavirus antibody test – developed by Swiss company Roche – is 100% accurate.

With that positive news we’ll leave you for another week. Well, almost…

Last week we told you about Tesla boss Elon Musk, who won the ‘Own Goal of the Week’ by tweeting that the share price was too high and knocking $14bn (£11.3bn) off the value of his own company.

He did have some compensation when his girlfriend, a singer called Grimes, gave birth to a son. The young chap has been named X Æ A-12. It’s apparently pronounced X-Ash-A12 which will certainly make calling the school register interesting!

Welcome to our latest client update as Europe starts to ease the lockdown and everyone wonders what the ‘new normal’ will look like once the UK returns to work.

As with the update we wrote just before Easter, this one is coming to you a day early to allow for the VE Day Bank Holiday on Friday. The stock market figures quoted below were therefore correct at close of business in the relevant market on Tuesday, with the commentary written on Wednesday morning and then, as always, revised after the latest Government briefing.

The Latest News

This has been a short week, and it has been a week in which the bad news has outweighed the good. Last week brought us the fall in US GDP in the first quarter and this week that has been reflected in company news, with several companies announcing job losses.

At the moment, these have perhaps been most keenly felt in the aviation industry. With social distancing on flights and health screening before check-in both looking inevitable, air travel suddenly seems a lot less attractive.

Legendary investor Warren Buffet announced that he was selling all his stock in US airlines, saying he “sees no upside,” and GE announced that it would cut 25% of jobs in its aviation division, amounting to 13,000 jobs.

Closer to home, Rolls Royce said it could cut up to 8,000 jobs as aircraft manufacturers around the world were forced to scale back production.

As job losses mounted and stock markets fell, the Independent dubbed last Friday ‘the saddest day we have seen for the global economy.’

Fortunately, the world is fighting back. In the UK, ‘Bounce Back’ loans are now available for small businesses, with the participating banks receiving over 100,000 applications on the first day. These loans, which are for amounts between £2,000 and £50,000 and repayable over a six year term, will undoubtedly save many small businesses which might otherwise have failed.

Looking at the wider economy, trade talks between the UK and the US have started (in parallel with the ongoing Brexit talks), with both sides seemingly determined to reach a free trade agreement in record time.

The Stock Markets

As we have commented previously, a week (especially a six day one) is a very short period of time when you are reporting on stock market movements. One piece of bad news can adversely affect markets, and in such a short space of time they don’t have a chance to recover. So it was this week, with worries about US/China tensions over Coronavirus. Throw in the sharp drop in US factory orders, clearly with worse to come, and all the major markets on which we report fell this week, with just one exception.

It is worth stressing though, that markets like the UK, the US and Germany are all higher than they were two weeks ago. This week’s falls did not wipe out the previous week’s gains.

The UK’s FTSE 100 index fell by 4% in the week, starting at 6,115 and closing Tuesday at 5,849. Two of the world’s leading emerging markets, India and Brazil, were down by a similar amount.

Most markets were down by slightly less: the US Dow Jones index, the German DAX index and the markets in Hong Kong and South Korea all fell by 3%. The Dow Jones opened the week at 24,634 and ended it at 23,883.

The one major market to buck the trend was China’s Shanghai Composite index, which rose 1% in the week to 2,860.

The pound almost managed to be completely unchanged against the US dollar in the week, starting its trading at $1.2447 and ending it the smallest fraction down at £1.2446.

Our Thoughts

As we have noted above, last week brought its fair share of bad news but – and, admittedly, this is only anecdotal evidence – we detect a real willingness to get back to work and a determination to fight back against what has happened.

As many of our clients know, we stay in very close contact with the industry’s fund managers, the professionals who manage the money our clients have invested. They are going to face some significant challenges as the world returns to the ‘new normal.’ As we have seen with the aviation industry, some sectors of the economy will be permanently changed by Coronavirus. We will stay in regular and close contact with the fund managers as they develop new investment strategies and make sure our clients are always updated.

Hopefully, by the time we send our next update, on Friday 15th May, there will be news of the easing of lockdown in the UK. The Prime Minister is due to make a statement on Sunday, which will hopefully pave the way for schools and businesses to re-open. Who knows, we may even see some football…

But for now, we leave you with news of someone who scored a spectacular own goal this week. Elon Musk, founder of US car company Tesla, tweeted that he thought the share price was too high, and promptly wiped $14bn (£11.3bn) off the value of his company.

And finally, news of something else we must do in lockdown. As if social distancing and making our own face masks were not enough, consumers in the UK and Europe are being told they must eat more steak, chips and cheese during lockdown. There is a surplus due to the closure of restaurants and bars and, well… the food producers say it’s up to you and me.

The problem is, apparently, especially bad in Belgium where the country’s 5,000 frites stands are all closed. So we’ll leave you there, and just pop over to Brussels to eat some chips. Surely that’s ‘essential travel?’

Welcome to our latest client update, from a week that brought us a new son for the Prime Minister and his partner, a promotion for Captain Tom and rising stock markets around the world.

As usual, the stock market figures quoted in this update were correct at the close of business in the relevant market on Wednesday. The commentary was written on Thursday morning, and then revised after the Prime Minister’s briefing on Thursday evening, when he offered the optimistic view that the UK was “past the peak and on the downward slope.” Next week, we will hopefully be reporting on the Government’s plan to “get the UK back to work.”

The Latest News

Last week it was China, this week it was the turn of the US to report an economic downturn in the first quarter of the year. As the country recorded 1m confirmed cases of Coronavirus, figures showed that the economy had contracted by 4.8% in the first three months of the year. This was the worst performance since 2008 and ended a run of expansion going back to 2014.

There was more bad news for the US on Thursday afternoon when the latest unemployment figures showed that more than 30 million Americans have lost their jobs since mid-March.

You may have heard economic commentators talking about something called the Purchasing Managers’ Index. It is, simply put, a numerical measure of business confidence in a country, with any figure above 50 indicating optimism and anything below 50 meaning that businesses are pessimistic. You won’t be surprised to hear that the figures recorded in April were the lowest ever – 12.9 in the UK and 13.5 in Europe.

But in many ways, those figures – like the GDP fall in the US and the similar figures that will surely follow from the UK – are yesterday’s news. The emphasis now is on the recovery as many European countries start to gradually ease the restrictions of lockdown and, in the UK, Chancellor Rishi Sunak finally bowed to pressure to help small firms.

Small and medium sized companies will now be able to obtain loans of up to £50,000 which will be 100% guaranteed by the Government. These ‘bounce back’ loans will be a lifeline for many small companies and should mean that far more firms survive the pandemic than might otherwise have been the case.

The Stock Markets

Almost without exception this was a good week for world stock markets, with several of them making significant gains as a top US infectious disease expert said the early results of a drug being developed by Gilead Sciences were “quite good news.”

Among major markets, Germany’s DAX index led the way, rising by 7% to 11,108. The UK’s FTSE 100 index was up by 6% to 6,115 and in the US, the Dow Jones was up 5% to 24,634.

The only major market to fall was China’s Shanghai Composite, which was down 1% to 2,822, but the other major markets in the Far East – Japan, Hong Kong and South Korea – all rose by 3%.

The pound was up by 1% in the week and, on Wednesday evening, was trading at $1.2447.

Our Thoughts

We mentioned the phrase ‘new normal’ last week and they suddenly seem to be the words on everyone’s lips. Unquestionably the world is going to look very different when we finally emerge from this pandemic.

This morning, the boss of Barclays has said that “big, expensive offices may become a thing of the past” and – with the Times reporting that we’ll need to be at the airport four hours before a flight as medical screening is added to security, far more of us may choose to work at home and holiday in the UK.

We won’t know the full effects of the virus until some time after we have finally beaten it. Many household name businesses will have disappeared. Many business owners – especially those close to retirement – will decide that the game is no longer worth the candle. But new businesses will emerge, finding new ways of working and delivering new products to new markets.

We remain optimistic – and this week that optimism was shared by the world’s stock markets. Saving and investing remains a long term commitment: Coronavirus may have brought that into sharp relief, but the fundamentals do not change. Neither does our commitment to give you the very best financial planning advice.

Whatever your views on this week’s news, there has been the usual slew of offbeat stories to lighten the mood. Pride of place though, must go to Captain Tom Moore or, as we must now learn to call him, Colonel Tom Moore. He celebrates his 100^th birthday as we write and has so far raised a quite staggering £31m for the NHS. Never was a promotion more richly deserved.

Let us finish this week with news of a company that is doing well during lockdown. That company is fashion retailer Boohoo, where, perhaps unsurprisingly, sales of tops have increased because, “everyone wants to look smart on Zoom calls.”