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Last Week in the City: Green energy gathers momentum

Garry White, Chief Investment Commentator, provides a round-up of the market movements and the global investing outlook this week ending 16 October.

Garry White, Chief Investment Commentator, provides a round-up of the market movements and the global investing outlook this week ending 16 October.
Garry white employee

by
Garry White

in Features

16.10.2020

The rising number of Covid-19 infections, particularly in Europe and the US, hit market sentiment as it appears the second wave of infections is now here. The UK government tightened its lockdown rules in response to rising infection rates in the UK. However, the hope of further stimulus from governments, especially the US, is providing some support to valuations.

The FTSE 100 fell 1.7% the course of the week by mid-session on Friday, with the FTSE 250 down 1% over the same period.

 

ESG Investing: Many investors are interested in the impact of their investments on the world around them. We take a look at this unstoppable investment trend in this week's article, ESG investing more important than ever.

 

Money’s generational divide: Each generation is shaped by landmark events which take place during our formative years. Katie Tasker looks at the relationship between money and age in this week's article, The generational divide over money.

 

Charles Stanley Radio

Listen to our Research team and Investment Managers discuss hot market topics.

The outlook for sterling: In this episode, we discuss factors which affect the value of the great British pound.

The US presidential election: What does it mean for markets? In this episode, we discuss the upcoming US presidential election and the impact this will have for investors. 

Globalisation: The end of the party? Whilst the last century was defined by globalisation through global supply chains and cheaper trade, Garry White & Will Dobbs explore how both the Covid-19 pandemic and Brexit have and will affect globalisation. 

 

Covid-19

The second wave of Covid-19 infections looks like it has arrived:

  • Infection rates in Britain are rising so Boris Johnson’s government introduced new lockdown restrictions, with the toughest “very high” rules imposed on Merseyside. London was in the so-called “high” alert level, up from the prior “medium” level. It means millions of people will be unable to meet with anybody outside their household or support bubble in any indoor setting, whether at home or in public in the capital city.
  • The World Health Organization (WHO) reported a record one-day increase in global coronavirus cases on Thursday, with the total rising by 338,779 in 24 hours. The biggest increases were from India, the United States and Brazil, according to the WHO. Deaths rose by 5,514 to a total of 1.05 million.
  • US cases of crossed 8 million on Thursday, rising by 1 million in less than a month.
  • At almost 9,000, Italy reported the highest daily tally of infections since the start of the country's outbreak.

But work towards a vaccine continued:

  • The global economy could grow by an additional $9 trillion by 2025 – and stage a faster recovery from Covid-19 with greater international cooperation on global vaccines, the International Monetary Fund's (IMF’s) managing director Kristina Georgieva said.
  • AstraZeneca, whose US Phase 3 coronavirus vaccine clinical trial has been on hold for more than a month, did not get critical safety data to the US Food and Drug Administration (FDA) until last week, reports in the US suggested. They noted that the FDA was considering whether to allow AstraZeneca to restart its trial after a participant became ill. At issue is whether the illness was a fluke, or if it may have been related to the vaccine.
  • Human trials of potential Covid-19 vaccines, where volunteers are deliberately infected with the virus, may happen soon after a unit of British biotech group Open Orpha said it was in advanced talks with the government to create and provide strains of the virus. The aim is to speed up the process of determining the efficacy of a vaccine candidate.
  • One of China's front-running coronavirus vaccine candidates was shown to be safe and triggered immune responses in a combined early and mid-stage test in humans, researchers reported. It is being developed by the Beijing Institute of Biological Products, a subsidiary of China National Biotec Group.
  • Gilead Sciences questioned the findings of a WHO study which concluded that its Covid-19 drug Remdesivir did not help patients who have been admitted to hospital. The US company told Reuters the data appeared inconsistent, the findings were premature and that other studies had validated the drug's benefits.

Economics

Building back better in a post-Covid world: The desire to ensure something good comes out of the pandemic plays on people's wish that the sacrifice of jobs, businesses and incomes made at the behest of government should not be in vain. We look at recovery hopes and dreams in this week's article, Building back better in a post-Covid world.

Geopolitics

America goes to the polls to elect its next president on 3 November. Although the vote is likely to be tighter than polling suggests, a Biden win looks likely. If the Democrats win, the changes in US policies will be huge. We look at the implications in this week's article, A new orthodoxy may emerge in the US.

The EU has been given permission to levy tariffs on US products worth $4bn in retaliation for subsidies given to Boeing. This is the latest development in a bitter 16-year battle between the US aircraft maker and its European rival Airbus. The ruling by the World Trade Organisation (WTO), delayed by the pandemic, could increase trade tensions shortly before the US presidential election on 3 November. It may, however, help to focus negotiations between the EU and the US, which has already imposed levies on European goods in parallel action against Airbus.

Technology

Apple confirmed its iPhone 12 handsets will be its first device to work on faster 5G networks. Commentators note that the new features give Apple its best opportunity for growth since 2014 when it revamped its line-up with the iPhone 6.

Google's parent company Alphabet unveiled a prototype robot that can inspect individual plants in a field in a bid to help farmers boost crop yields. The robot buggies roll through fields on upright pillars, so they can coast over plants without disturbing them. ‘Project Mineral’ which aims to create world-changing technology from radical ideas. Garry White argues that The robots really are rising.

Energy

Oil prices fell at the end of the week, hit by concerns that a spike in Covid-19 cases in Europe and the United States is curtailing demand in two of the world's biggest fuel-consuming regions. A stronger US dollar also pressured prices. Because commodities such as oil are priced in dollars, a rising greenback makes oil more expensive for buyers in other currencies – and it can therefore crimp demand. This explains why commodity prices and the dollar tend to have an inverse relationship. Brent crude future rose by about 0.3% over the week by mid-session in Friday, trading at about $42.70 a barrel.

Joe Biden’s green policies are ambitious and will change the direction of the global energy industry. But in the race to develop new technology, China holds a few good cards. Garry White looks are rare-earth metals in this week's article, Biden’s green revolution is missing some vital elements. We also look at how the move to green energy will shake sectors and markets.

Last week, the UK government committed working towards ‘net zero’ emissions by 2050, a move it said will support 60,000 jobs. Green policy uptake is are accelerating around the world. The European Union, China – and the US if Joe Biden wins the Presidential election – will also have carbon ‘net zero’ targets similar to the UK. The main aim of ‘net zero’ is to slash damaging, human-caused emissions to as close to zero as possible. Any remaining polluting gases pumped into the atmosphere will be balanced with an equivalent amount of carbon and other pollutant removals. This could be achieved through forest expansion or by using new carbon-eliminating technology. This implies forests are an essential component of a green-led recovery – and you can discover exactly why in this week's article, Green-led recovery and the role of forests.

In March 2019 the UK planted 13,400 hectares of new woodlands.

Consumer

JD Wetherspoon reported its first annual pre-tax loss since 1984 after Covid-19 restrictions damaged trade significantly. The pub's group chairman, Tim Martin severely criticised changes in rules to stop the spread of the virus, which he said were "confusing".

Travel

Airline and airport groups called on governments around the world to provide fresh aid packages for the aviation industry. The main demand was to replace quarantine rules with a testing regime. The International Air Transport Association (IATA) warned that airlines around the world faced a fall in revenues this year of $418bn. Airport Council International said airports would see their own income fall by $104bn. IATA director general Alexandre de Juniac said that financial aid packages granted by many countries to their aviation businesses earlier this year had been put together on the assumption that recovery would be well underway by now. "Without a second tranche of financial aid, many airlines will not survive the winter", Mr de Juniac said.

Retail

Shopping centre giant Hammerson said just 38% of its UK tenants had paid rent for the final quarter of the year.

It’s not all bad news in retail, however. Home and furniture specialist Dunelm posted a 37% jump in first-quarter sales thanks to higher demand for home items. Management cancelled its last final dividend due to uncertainty caused by the pandemic, however, the retailer announced in September that it had experienced encouraging trading in its stores since re-opening and expected to pay an interim dividend in fiscal 2021.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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