Weekly Market Update

13/07/2020

The UK’s lockdown unwinding is set to continue this week with artists and musicians now able to perform live outside, while outdoor pools will also be opened. As of Monday 13th, beauticians, spas, tattooists and tanning salons can reopen.

For those that have indulged over the lockdown period, gyms, indoor pools and leisure centres will open on 25th July. All of these, of course, will come with caveats on social distancing.

650 new cases of Coronavirus were reported on Sunday 12th July, along with 21 fatalities – again, still trending downwards. The UK is now doing more testing than anywhere else in Europe and as such is able to offer a detailed regional picture that shows how rapidly the virus has receded across most of the country. For the period 29th June to 5th July, only Leicester had more than 150 cases per 100,000 population, and even now it is unclear if this is simply due to more testing.

Nearly three quarters of local authorities have five or less cases per 100,000 people; in London, a city of 9 million, only 35 cases per day were diagnosed, and of all the tests taken in Bath and Cornwall, not one came back positive.

In markets, we again saw divergence between better performing Emerging Market equities (2.06%) and developed market equities, with the US rising by just 0.22%, Europe falling by 0.41% and the UK again lagging. The FTSE 250 fell by 0.69% and the FTSE 100 by 0.93%. As before, COVID is now less of an immediate concern domestically, with focus increasingly turning back towards Brexit.

Precious metals performed well again during the week, with the price of silver rising by nearly 4% in US Dollar terms, and that of gold by 0.66%. Silver has lagged gold this year, though tends to outperform during a bull market. The chance of this occurring should rise as extraordinary monetary and fiscal policy continues to be pervasive.

Looking ahead, corporate earnings season for Q2 2020 begins this week, and we will no doubt see both positive and negative surprises. Regardless, the next few weeks will be an important gauge of corporate fortunes and forward guidance, both of which will influence market sentiment.

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