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Last Week in the City

Last Week in the City: UK in historic recession

Garry White, Chief Investment Commentator, provides a round-up of the market movements and the global investing outlook this week ending 14 August.

Garry White, Chief Investment Commentator, provides a round-up of the market movements and the global investing outlook this week ending 14 August.
Garry white employee

by
Garry White

in Last Week in the City

14.08.2020

UK GDP fell by more than a fifth in the second quarter of 2020, indicating the economy was hit harder than any other European nation. Bipartisan talks over a further Covid-19 stimulus package in the US broke down and an agreement now seems distant. Russia said it had produced a vaccine against the virus, but it has not been through extensive trials and it has not supplied any data to the World Health Organisation, leading many to question its efficacy and safety.

The FTSE 100 was up 0.3% over the course of the week by mid-session on Friday. The FTSE 250 was up 0.4% from the prior Friday.

Robinhood is a US trading app that offers commission-free trading and has immense popularity among Millennial and Generation Y traders. Garry White argues it is creating bubbles in certain shares here.

Charles Stanley Radio

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

The Paradox of Inflation: In this episode, we are joined by Investment Managers from our Edinburgh office to discuss the mythical beast of inflation. Listen here.

Harlequins Mindfulness Series: In partnership with Harlequin FC, Luke Doherty, the team’s mindfulness coach, talks to us about the importance of mindfulness in both our professional and personal lives. Discover what he had to say here.

Cyberwar: the biggest threat this century? In this episode, we discuss the increase in international cyber-attacks and what this means for technological market growth and the future of cyber security. Listen here.

The radio page with all previous recordings can be found here.

Covid-19

In the US, a bipartisan deal for a new stimulus package appeared out of reach, with congressional Democrats blaming Republicans, Republicans blaming Democrats and President Donald Trump suggesting the talks were doomed.

Russia granted regulatory approval to a Covid-19 vaccine after less than two months of human testing. Moscow said on Wednesday that the first batch of the vaccine would be ready for some medics within two weeks and rejected safety concerns as "groundless". No large-scale trials have been held and data on its efficacy has not been provided to the World Health Organisation. We look at positive Covid-19 developments here.

The UK added France to the list of countries that required a 14-day quarantine period when holidaymakers return home or visitors travel to Britain. It also added the Netherlands, Monaco, Malta, Turks and Caicos, and Aruba. It came after France's prime minister acknowledged infection numbers were going "the wrong way". France warned it would take "reciprocal measures". The move hit the share prices of travel companies such as Tui and airlines, including easyJet.

Fines of up to £3,200 for repeatedly not wearing a mask have been announced by Boris Johnson alongside eased lockdown measures for bowling alleys, casinos, skating rinks and beauty salons.

The UK government has signed a deal for 90 million more coronavirus vaccine doses from US biotech company Novavax and Belgian pharma giant Janssen. That means the UK has now agreed deals for a stockpile of 340 million vaccine doses, and six different types of coronavirus vaccines.

Economics

The UK economy suffered a bigger slump than any other major European economy in the second quarter, shrinking by a fifth and falling into its deepest recession on record. The economy contracted more than 20% quarter-on-quarter.

Geopolitics

China’s Huawei and ZTE Corp are set to be kept out of India’s plans to roll out its 5G networks as relations between the two countries hit a four-decade low following deadly border clashes. India will apply investment rules amended on July 23 that cite national security concerns to restrict bidders from nations it shares land borders with to keep out the companies.

The US said it will hold off on its threatened hike in tariffs on $7.5bn worth of European and UK goods that it imposed as punishment for subsidies for plane-maker Airbus. The move comes as the two sides wrestle to put to an end their 16-year trade battle over state aid for Airbus and American rival Boeing. The US last year raised border taxes on more than 100 items, including jumpers, single-malt whiskies and cheese.

The US presidential elections take place on 3 November and Donald Trump is now closing the gap in the polls with Joe Biden. We look at the battle for the White House here.

Brexit

British Prime Minister Boris Johnson and his Irish counterpart Micheál Martin voiced optimism for a zero-tariff British-European Union trade deal after meeting in Northern Ireland on Thursday for talks. However, Mr Johnson later reiterated that Britain would not drop its rejection of level-playing-field commitments beyond those normally found in a free-trade agreement, a key sticking point.

Technology

Apple has removed Epic Games’ Fortnite from its App Store, preventing players from installing one of the world's most popular games on iPhones. It came after a Fortnite update that let players buy in-game currency at a lower rate if they bought direct from Epic – bypassing Apple. In a prepared move, immediately after its removal from the store, Epic filed a filed a legal complaint accusing Apple of monopolistic practices as it takes a 30% cut of all sales from its compulsory payment system. The dispute came as Apple chief executive Tim Cook moved into the billionaire club as the tech company’s share price continues to soar.

Energy

Brent crude prices were little changed over the week, rising 0.4% by mid-session on Friday to trade at about $44.58 a barrel.

The move to green energy is happening but one of the difficulties in assessing the pace and likely success of the green revolution is consumer resistance to change. We take a look at the issue here.

Mining and commodities

The spot gold price fell from its record high of $2,075 hit on 6 August to $1,948 per ounce by mid-session on Friday. This was its first weekly decline since June.

Retail

UK retail sales rose again in July, according to the British Retail Consortium. Sales rose 3.2% compared with the same month last year. However, the number of visits to High Streets is still down significantly as people shop online instead.

Nearly 300 workers at Greencore, one of Marks & Spencer’s sandwich suppliers, tested positive for Covid-19 amid a spike in local infections.

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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