{"id":1978,"date":"2020-05-28T10:23:55","date_gmt":"2020-05-28T10:23:55","guid":{"rendered":"http:\/\/www.wealthatwork.co.uk\/jpm\/?p=1978"},"modified":"2020-11-18T10:03:26","modified_gmt":"2020-11-18T10:03:26","slug":"market-update-28th-may-2020","status":"publish","type":"post","link":"https:\/\/www2.wealthatwork.co.uk\/jpm\/2020\/05\/28\/market-update-28th-may-2020\/","title":{"rendered":"Market Update \u2013 28th May 2020"},"content":{"rendered":"<div class=\"wpb-content-wrapper\"><div class=\"vc_row wpb_row vc_row-fluid\">\n<div class=\"wpb_column vc_column_container vc_col-sm-12\">\n<div class=\"vc_column-inner \">\n<div class=\"wpb_wrapper\">\n<div class=\"wpb_raw_code wpb_content_element wpb_raw_html\">\n<div class=\"wpb_wrapper\"><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/vB6ZsfGAJt4?rel=0&amp;wmode=transparent\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\" data-mce-fragment=\"1\"><\/iframe><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"vc_row wpb_row vc_row-fluid\">\n<div class=\"wpb_column vc_column_container vc_col-sm-12\">\n<div class=\"vc_column-inner \">\n<div class=\"wpb_wrapper\">\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<p>Global equity markets continued to rise yesterday (27 May 2020) as economic reopenings, stimulus measures and optimism about efforts to find a treatment and vaccine for the coronavirus outweighed the simmering geopolitical tensions between the US and China.<\/p>\n<p>The FTSE-100 closed up 76.49 points, or 1.26% \u2013 and is today, as we write, up a further 30 points, or 0.5%.\u00a0 On Wall Street, the Dow Jones and the S&amp;P 500 rose to close above the psychological 25,000 and 3,000 levels respectively for the first time since early March:\u00a0 the Dow rose 553.16 points, or 2.21% to 25,548.27, while the broader S&amp;P 500 rose 44.36 points, or 1.48% to 3,036.13.<\/p>\n<p>The story of the day was the EU\u2019s \u20ac750bn stimulus package (split \u20ac500bn in grants and \u20ac250bn in loans).\u00a0 Of course, all 27 EU members need to ratify the stimulus \u2013 and there are never any guarantees when it comes to European summits, especially as it appears to be a step on the road to a fiscal union, which has to date been the EU\u2019s biggest flaw.\u00a0 However, the sticking points for those countries that had previously opposed the plan appear to have been resolved with the bigger allocation to grants, so we would expect the deal to be approved \u2013 and this will obviously boost sentiment across Europe and allow equity markets to continue to look past the current poor economic data and instead focus on the economic reopenings and recovery and in doing so, help to sustain the current equity market positivity.<\/p>\n<p>Interestingly, economically sensitive stocks have been particularly strong this week as they have reversed some of the massive losses they suffered during the economic lockdowns.<\/p>\n<p>Shares in the Travel &amp; Leisure sector for example have been amongst this week\u2019s biggest gainers.\u00a0 IAG (the owner of British Airways) is currently up around 35% this week, Carnival Cruises is up just over 25%, while the tour operator, TUI is up over 80%!\u00a0 Shares of retailers which have also been negatively impacted by the \u2018stay at home\u2019 order have also been big winners:\u00a0 JD Sports is up nearly 20% this week, while Associated British Foods (the owner of Primark) is up nearly 15%.<\/p>\n<p>While the path of least resistance is clearly currently up, as lockdown restrictions are lifted, we don\u2019t believe that some of these increases are fully warranted.<\/p>\n<p>Although we have argued that there will be a V-shaped recovery and we will see consumer spending pick up, the current social distancing rules and lack of a vaccine will mean that restaurant bookings and spending on holidays will be slower to pick up meaning this week\u2019s sharp rally in these companies could quickly reverse \u2013 and as such, we are currently underweight in these companies.<\/p>\n<p>While this decision has slightly dulled our relative investment performance this week, as we have previously said, we believe that risk management is just as important as investment performance and returns, meaning that we will never shoot the lights out with our investment performance, but instead, provide you with consistency.<\/p>\n<p>Elsewhere, there was little excitement from the Fed\u2019s Beige Book \u2013 as their assessment of the US economy remained weak (especially in travel and hospitality).\u00a0 Of note however, was the concern on wages: \u00a0as companies appear to be considering cutting employees\u2019 salaries \u2013 which could impact the speed and shape of the US economic recovery given the consumer accounts for around two-thirds of the US economy. \u00a0However, we haven\u2019t seen much evidence of this actually happening \u2013 and in fact, the Beige Book also stated that consumer spending in one of the 12 Fed districts had increased and several districts saw improvements in car sales.<\/p>\n<p>Additionally, we will see this afternoon in the weekly US jobless claims data if laid-off workers are being re-employed.<\/p>\n<p><strong>Investment Management Team<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n  <\/div> ","protected":false},"excerpt":{"rendered":"<p>Global equity markets continued to rise yesterday (27 May 2020) as economic reopenings, stimulus measures and optimism about efforts to find a treatment and vaccine for [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"_links":{"self":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/1978"}],"collection":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/comments?post=1978"}],"version-history":[{"count":2,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/1978\/revisions"}],"predecessor-version":[{"id":2179,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/1978\/revisions\/2179"}],"wp:attachment":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/media?parent=1978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/categories?post=1978"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/tags?post=1978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}