Jun 01 2020

We have seen several important Government updates over the last week. The Chancellor, Rishi Sunak confirmed that the coronavirus furlough scheme will finish at the end of October and provided further information on how it will be tapered to that point.

From August, employers must pay National Insurance and pension contributions, then 10% of pay from September, rising to 20% in October. At the moment, some 8.4 million workers are covered by the furlough scheme, with claims for subsidies rising to £15 billion.

A similar scheme for self-employed workers saw 2.3 million claims worth a total of £6.8 billion. This has also been confirmed to continue until October in a boost for many small and medium enterprises. With both schemes we must look to the speed of economic normalisation for positive news; the quicker lockdown is lifted, the better the economic outcome.

113 COVID-19 deaths were announced on 31st May, with the 7-day rolling average still moving downwards, whilst daily test numbers remain well over 100,000 per day:

From 1st June, in England up to six people from two different households will be able to meet outside, as long as they maintain social distancing. In Wales, any number from two households may meet, as long as they don’t travel more than 5 miles to do so. Getting together with members of more than one household at the same time will be illegal.

Markets saw a continuation of the previous week’s theme; namely a strong revival of ‘value’ stocks and of UK and European companies over their US counterparts, combined with increased volatility in Asian stocks as investors focused on rhetoric emanating from China and the US.

Emerging markets outside of Asia performed well again, with Latin American equities rising strongly in Pound terms (+4.88%), Japan close behind after ending their state of emergency (+4.35%), and the FTSE 250 enjoying a strong bounce along with the Pound (+3.94). Asian equities rose by just 0.99% by comparison, with the FTSE 100 also languishing at +1.41%.

Riskier high yield bonds continued their rally, rising by nearly 2% on the week, whilst UK Gilts fell by 0.3% as safe havens were perceived as less important. In a similar vein, the price of gold also fell slightly during the week by 0.1% in Dollar terms, though the price of silver rose by 4.56%.

Risky assets have recovered a good part of their losses sustained through February and March, and we are less certain of another leg up from here. As has been mentioned previously, Q2 economic data will be very poor, and the question remains as to how much of this is priced in. As always, we hope that economic reopenings continue as rapidly and as sensibly as possible.

If you’re not already doing so, can I encourage you to follow our social media platforms to keep up to date with our latest updates and news? You will find Fairstone Group on Facebook, LinkedIn and Twitter.

The value of investments may fluctuate in price or value and you may get back less than the amount originally invested. Past performance is not a guide to the future. The views expressed in this publication represent those of the author and do not constitute financial advice.

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For further information, please contact:

Andrea Barker andrea.barker@fairstone.co.uk / Tel. +44 (0) 191 519 6243