Hello, and welcome to our latest weekly client update. As previously, the update was written on Thursday (and revised after the Government’s daily briefing) with the quoted stock market figures correct as at close of business on Wednesday. Please note that next week we will bring everything forward by a day to allow us to send the update out before what we’ll optimistically call the ‘Easter break’.
The latest news
It hardly counts as ‘latest’ news, such is the pace of change, but the last seven days saw the Prime Minister, Health Secretary and Chief Medical Officer all test positive for Covid-19. Speaking from isolation, Boris Johnson said that ‘things will get worse before they get better’ and it currently seems that the rate of infection in the UK is doubling every 3-4 days.
Health Secretary Matt Hancock did return to work – and to the daily news updates – on Thursday, and has committed to 100,000 tests per day by the end of April.
Our last update outlined the measures central banks and governments around the world were taking to combat the pandemic but, as UK Chancellor Rishi Sunak said, governments will not be able to ‘protect every company and every job.’
By the time this is eventually over, some household names will have ceased to exist and, if the queue for bailouts is any guide, many of them will be in the airline industry. Virgin Atlantic will be asking the UK government for help and, in the US, American Airlines says it needs $12bn (£9.67bn).
Meanwhile, the number seeking unemployment benefits has risen sharply: nearly 1m people have applied for universal credit in the UK in the last two weeks. In the US, it was reported on Thursday afternoon that the number claiming unemployment benefit had surged to over 6m.
The stock markets
Most of the major world stock markets have fallen over the last week, as the ‘bounce’ from the stimulus packages introduced by the various governments wears off. The UK’s FTSE 100 index of leading shares was down by 4% and this was typical of the falls seen on the major European markets. The US Dow Jones index was down by just 1% while China’s Shanghai Composite index fell by 2% as factory activity in the country reportedly jumped back to pre-pandemic levels.
The one exception to the falls was the Russian market, which rose by 1% in the week. The pound also enjoyed a good week against the dollar, and was up by 4% to $1.2378.
It would be easy to see the news from this week as wholly negative: stock markets down, the numbers of companies seeking bailouts and the number claiming unemployment benefits both up. But that was always going to happen, given the measures that have had to be taken to combat the virus.
And there have been some good news stories this week, reinforcing our view that when the virus is over, the recovery may be quicker than many people are currently predicting.
As we noted above, Chinese factory output is already back to pre-crisis levels. In the US, President Trump has said that, “With interest rates for the United States being at zero, this is the time to invest in our decades long awaited Infrastructure Bill.”
And while stock markets may be down this week, we have not seen the wild fluctuations that we saw in previous weeks. All the major world markets, with the exception of India, remain higher than they were two weeks ago.
As usual, please stay safe, stay well, and remember that we are always here to answer your questions. We may be working from home, but we are never more than a phone call or an email away.