May 26 2020

We have had more good news over the last week as new coronavirus cases and deaths commensurately fall. On Monday 25th May the UK reported 121 deaths and 1,625 new cases – both the lowest since March – with the 7-day rolling trend firmly downwards:

Boris Johnson is expected to announce a further loosening of restrictions this week, with outdoor markets and car showrooms able to reopen from 1st June. Other ‘non-essential’ outlets including shops selling clothes, shoes, toys, furniture and electronics are on track to reopen from 15th June provided trends remain under control.

In addition, the Government is drawing up plans to allow people to have garden parties and barbecues next month as part of a wider plan to allow people to mix in ‘social bubbles’ of up to 10 people outdoors. Some commentators are urging the Government to move faster, not least because many people are already applying a common-sense approach and enjoying each other’s company (largely) sensibly.

Markets’ focus again was less on COVID this week and increasingly on other topics. Tensions between the US and China have resurfaced, with Beijing condemning Washington’s decision to add 33 Chinese entities to a trade blacklist, restricting access to American technology and other items. The two countries have clashed on a range of issues from trade to Taiwan in recent weeks, as the Trump administration’s thoughts turn towards the Presidential election this November.

Separately, China announced it would try and bypass Hong Kong’s legislature and implement controversial new national security legislation banning ‘subversion, secession, terrorism and foreign interference’. Details remain unclear but the move has been interpreted domestically and internationally as another attempt at a power grab by China, leading to mass protests.

This led to Asian equities underperforming for the week in Pound terms (-1.98%) after a sharp fall on Friday, with Emerging Markets more broadly also dragged down (-0.05%) despite the Latin American (+7.83%) and Eastern European (+6.99%) regions outperforming strongly as more positive sentiment emerged. Emerging Market currencies were also more positive this week, with the likes of the Brazilian Real and South African Rand rising by well over 4% versus the Pound.

Elsewhere, European and UK equities outperformed, again benefitting from a turnaround in sentiment after a torrid time. The FTSE 250 was the top performer, rising by 4.75% during the week, with the FTSE 100 slightly behind on 3.40%. European equities rose by 3.80%, buoyed by improved business survey data and a joint announcement from France and Germany’s leaders on a €500bn aid package, backed for the first time by EU-backed bonds.

Encouragingly, European countries opening earlier and faster than the UK have reported no discernible rise in new infection cases since doing so, in a further boost to sentiment. Epidemiologists still warn on the chances of second waves, but for now the signs are positive that economic restarts can increase in pace and magnitude.

Domestically, we continue to try and look through the shorter term political and media hysteria over the alleged Cummings and goings of individuals to gauge the wider efficacy of Government and central bank support; particularly with regards providing a solid springboard to growth for businesses. We remain optimistic that the actions being taken will provide this and hope as always to see further falls in new infections and fatalities this week.

We appreciate that many clients will naturally feel concerned during these challenging times and at Fairstone, we believe that communication is key. As a reminder, we are here to talk about any concerns or questions you may have as well as to review your financial position. While we cannot meet face-to-face at the moment, we can chat on the phone, video call or via video conferencing.

If you’re not already doing so, please make sure you are following our social media platforms to keep up to date with our latest updates and news. You will find Fairstone Group on FacebookLinkedIn 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