With the quietest Easter any of us can remember out of the way, we’re back to normal for the update this week. That means the stock market figures quoted were accurate as at close of business on Wednesday, with these notes written on Thursday and then revised after the Government’s daily briefing on Thursday evening.
The latest news
This ‘week’ – given that we wrote our last update a day early – has seen its fair share of winners and losers. Let’s go quickly through them…
In the US, Bernie Sanders conceded defeat in the race for the Democratic nomination, meaning that November’s Presidential election will almost certainly be between Donald Trump and Joe Biden.
In the UK, the high street had another bad week as figures for March confirmed that retail footfall had fallen to its lowest level on record, and clothing chains Oasis and Warehouse went into administration, putting more than 2,000 jobs at risk.
It also looks like it will be a bad week for growth in China. The country’s GDP figures for the first quarter of the year will be published as this update reaches you. The consensus is that GDP will have fallen by 6.5% in the first quarter, but some forecasters are suggesting the fall could be as much as 10%.
Sadly, that pales into insignificance compared to the forecasts for the UK economy in the second quarter. Chancellor Rishi Sunak has reportedly told Cabinet colleagues that growth could fall by as much as 30% between April and June. Newspaper headlines went further, variously suggesting a 35% drop in GDP, two million people losing their jobs and, according to the Telegraph, Britain ‘facing the biggest economic shock in 300 years.’
What about the week’s winners?
Thanks to another stimulus package from the Federal Reserve, US shares were at one point enjoying their biggest weekly gain in 46 years. As we report below, the Dow Jones index had an excellent week.
Inevitably, it was another good week for Amazon unless you work in their HR department. Having hired an extra 100,000 staff last month, they added another 75,000 as demand for deliveries continued to increase.
There has also been an upsurge in online gaming, as increasing numbers of people have switched to playing and watching e-sports. Covid-19 will undoubtedly speed up changes to the UK high street. Could it do the same to the way we play and watch sport?
The stock markets
After the fluctuations of the last few weeks, this was a much more subdued week on world stock markets, with most of them moving in a narrow range. The US led the way up, rising by 4% to 23,504. The worst performer was the Russian market, which dropped 5% to 2,499 as the Covid-19 virus took a much stronger hold in the country.
China’s Shanghai Composite index was unchanged in percentage terms despite widespread warnings about Asian growth this year, while the UK’s FTSE-100 index fell by 2% to 5,598. Pride of place probably goes to the Greek market, which dozed peacefully through Easter, starting the week at 608 and ending it at 608.
The pound had a good week against the dollar, rising by 2% since our last update to close on Wednesday evening at $1.2544.
This last week has seen the usual mix of good and bad news. As we’ve mentioned above, Rishi Sunak gave a stark warning to his Cabinet colleagues. With Dominic Raab confirming another three weeks of lockdown on Thursday evening, it seems inevitable that the UK’s growth will be sharply down in the second quarter of the year. The Chancellor has, however, been equally adamant that the UK, which had a strong economy before the pandemic struck, will bounce back quickly.
By the same token, the International Monetary Fund has predicted a ‘deep recession’, but was equally quick to say that global economies will bounce back. Those are views that we share.
Yes, there is going to be some short term pain and, as the Chancellor has said, he cannot protect every job and every business. But we remain convinced that world trade and global economies will recover, and they may well recover more quickly than the generally accepted wisdom currently has it.
Finally, like the rest of the country, we must applaud Captain Tom Moore.
Captain Tom has been doing laps of his garden. He’s 99 and wanted to do 100 laps before his 100th birthday at the end of this month. Tom’s original aim was to raise £1,000 for NHS charities. So far he’s raised nearly £15m, with donations coming from 53 countries. In the time it has taken us to write this update, Tom has raised £500,000. Like the rest of the country, sir, we salute you.