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Last Week in the City: China avoids recession

Garry White, Chief Investment Commentator, provides a round-up of the market movements and the global investing outlook this week ending 17 July.

Garry White, Chief Investment Commentator, provides a round-up of the market movements and the global investing outlook this week ending 17 July.
Garry white employee

Garry White

in Features


It was a tale of two countries as far as the Covid-19 pandemic was concerned. China avoided falling into recession, as it continued to recover from the outbreak, but the US saw infections rise to a new record. There is little appetite for lockdowns in America, but more may be possible in places such as Texas. Positive news about some potential vaccine candidates provided some support to markets.

The FTSE 100 was up 3% over the course of the week by mid-session on Friday, and the FTSE 250 was up 1.5%.

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Boris Johnson announces local authorities in England to get power to impose local coronavirus lockdowns - closing businesses and cancelling events.

The situation in the US deteriorated. The country shattered its daily record for Covid-19 infections on Thursday, reporting more than 77,000 new cases as the number of deaths in a 24-hour period rose by nearly 1,000, according to a Reuters tally. The loss of 969 lives was the biggest increase since June 10, with Florida, South Carolina and Texas all reporting their biggest one-day spikes on Thursday.  More than 138,000 Americans have died from Covid-19 and this toll is expected to surge following recent record spikes in case numbers and a significant rise in hospitalisations in many states.

Australia's Victoria state on Friday reported a record daily increase in Covid-19 cases while neighbouring New South Wales said it was banning dancing, singing and mingling at weddings as the country attempted to contain a new wave of infections.

India became the third country in the world to record more than one million cases of Covid-19, behind only the US and Brazil, as infections spread further into the countryside and smaller towns.

Hackers backed by the Russian government are trying to steal Covid-19 vaccine and treatment research from academic and pharmaceutical institutions around the world, Britain's National Cyber Security Centre (NCSC) said.


China has avoided a technical recession after its economy grew 3.2% in the second quarter following a record 6.8% slump in the first quarter.

Singapore’s economy plunged into recession in the last quarter as an extended lockdown hit businesses and retail spending. Economic growth in the city state shrank by 41.2% compared to the previous quarter, the biggest contraction on record


Britain reversed its decision on Huawei. The UK's telecoms networks will not be allowed to buy new Huawei 5G kit from 31 December and all such equipment should be stripped out of mobile networks by 2027. It also wants BT Group's Openreach and other broadband infrastructure providers to stop using Huawei's gear in the rollout of full-fibre broadband within the next couple of years. The Chinese government said it was "strongly opposed" to the UK's "groundless" ban.

The US announced new restrictions against the company. Secretary of State Mike Pompeo said the US would curb travel access for some of Huawei's workers. “The State Department will impose visa restrictions on certain employees of Chinese technology companies like Huawei that provide material support to regimes engaging in human rights violations and abuses globally,” he said. Mr Pompeo also said Washington will support countries that believe China has violated their maritime claims in the South China Sea but suggested it would do so through diplomatic rather than military means.

US President Donald Trump has signed an order to end preferential economic treatment for Hong Kong, after China enacted a new security law. Beijing vowed to “retaliate”.

EU leaders were meeting on Friday in their first face-to-face summit since the Covid-19 crisis started, but there were low expectations of a deal on a €750bn stimulus package. French President Emmanuel Macron said it was a "moment of truth" for Europe. The main issue is how much of the recovery fund will be handed out in grants and how much in loans. The leaders also need to agree on a seven-year budget worth another €1.07 trillion.

US second-quarter reports

The big banks kicked-off earnings season with their quarterly reports. JP Morgan Chase's results came in strong, with the company reporting record revenue. On the other side of the spectrum was Wells Fargo, which said it lost $2.4bn in the second quarter. Goldman Sachs reported blowout second-quarter earnings, as its reliance on trading and investment banking paid off.


Netflix saw a surge in sign-ups due to lockdown but warned investors that subscriber growth will slow. The streaming giant added more than 10 million subscribers in the three months to July, bringing the total of new subscribers to 26 million in 2020. In context, Netflix added 28 million new subscribers for the whole of 2019.

Apple was told it will not have to pay Ireland €13bn in back taxes after winning an appeal at the European Union's second-highest court. It overturned a 2016 ruling which found the tech giant had been given illegal tax breaks by Dublin.

A major agreement governing the transfer of EU citizens' data to the United States has been struck down by the European Court of Justice (ECJ). The EU-US Privacy Shield let companies sign up to higher privacy standards, before transferring data to the US. But a privacy advocate challenged the agreement, arguing that US national security laws did not protect EU citizens from government spying. Indeed, the world’s most valuable resource is no longer oil, it’s data. However, unlike oil, data is highly mobile. Garry White looks at the issues surrounding digital sovereignty here.


Opec+ did not deliver any major surprises when it agreed to ease the production cuts beginning in August. The move was widely expected. Brent crude prices fell 0.6% over the week by mid-session on Friday to trade at about $43 a barrel.


Has the pandemic ended the reign of the jumbo jet? IAG-owned British Airways, the world's largest operator of Boeing 747s, will retire its entire jumbo jet fleet with immediate effect after the Covid-19 pandemic sent air travel into freefall.

Virgin Atlantic finalised a rescue deal worth £1.2bn that should protect thousands of jobs. Sir Richard Branson's Virgin Group will inject £200m, with additional funds provided by investors and creditors.


The market is finding it difficult to assess the real value of property because of limited transactions. But the outlook for some sectors is gloomy. We look at issues in the property market here.


The $50bn merger of car makers Fiat Chrysler and PSA Group will be accompanied by a new name: “Stellantis”. The new carmaker’s name is “rooted in the Latin verb ‘stello’ meaning to brighten with stars”, the company noted.

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