As countries across the globe eased lockdown restrictions to aid their economies, several countries, including South Korea, Iran, and Sri Lanka, were forced to reimpose restrictions after easing the measures caused a spike in infections.
One of the worst affected was Iran, recording its highest tally of new Covid-19 infections since early April, with 2,819 more people testing positive in 24 hours.
Despite the virus impact investor focus shifted towards Chinese tensions. China’s parliament passed the new national security law, expected to be enacted before September. The US signalled its intention to revoke Hong Kong’s special trade and economic status, under which the city is treated as separate from China on terms that have underpinned Hong Kong as a global financial hub. Beijing responded with defiance to international criticism threatening countermeasures against the UK and the US.
In terms of economic activity, US consumer spending suffered another month of record decline in April as the Covid-19 crisis hit demand. Consumer spending, which accounts for more than two-thirds of US economic activity, plunged 13.6 per cent over the month.
The weekly jobs data did however show a four million drop in continuing claims, highlighting people getting back to work.
While the European Commission called for a €750bn package of grants, loans and guarantees to bankroll Covid-19 recovery efforts and assist the hardest hit member states, the Eurozone stands on the brink of deflation as price growth fell from 0.3 per cent to 0.1 per cent in May. The inflation rate turned negative for 12 out of 19 countries.
In emerging market, Brazil’s economy contracted in the first quarter by the most in nearly five years, falling 1.5 per cent quarter-on-quarter, while India economy grew at its slowest rate in at least eight years in the first quarter, as the pandemic weakened already sluggish consumer demand and investments.