{"id":2011,"date":"2020-06-25T11:07:58","date_gmt":"2020-06-25T11:07:58","guid":{"rendered":"http:\/\/www.wealthatwork.co.uk\/jpm\/?p=2011"},"modified":"2020-11-18T09:51:08","modified_gmt":"2020-11-18T09:51:08","slug":"market-update-25th-june-2020","status":"publish","type":"post","link":"https:\/\/www2.wealthatwork.co.uk\/jpm\/2020\/06\/25\/market-update-25th-june-2020\/","title":{"rendered":"Market Update \u2013 25th June 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\/gp2X_l7si-A?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>As global equity markets are currently trading on every news headline, the mood has quickly turned from positive to negative.\u00a0 As a result, global equity markets fell heavily yesterday \u2013 and this has unfortunately followed through into this morning.\u00a0 For example, on Wall Street, the Dow Jones fell over 700 points, or just over 2.7%, while the broader S&amp;P 500 index fell nearly 2.6%.\u00a0 In the UK, the FTSE-100 which yesterday fell nearly 200 points, or 3.11%, initially opened this morning down a further 90 points (just over 1.5%) \u2013 although as we write, it has recovered slightly and is currently down around 20 points (0.3%).<\/p>\n<p>The reasons for this negative sentiment are threefold:<\/p>\n<ol>\n<li>coronavirus continues to spread in the US with states including California and Florida recording their largest daily increase in infections;<\/li>\n<li>news that Donald Trump was considering tariffs on $3.1bn of imports from the UK and EU;<\/li>\n<li>the IMF (International Monetary Fund) now expects a deeper recession than it expected two months ago.<\/li>\n<\/ol>\n<p>Although we fully understand and appreciate that this market volatility is unsettling and we are advocates of caution and risk management when it comes to managing client investments, we believe it is completely wrong to be despondent and say that the recent rally has run its course or that global equity markets will now sell-off.<\/p>\n<p>While these localised coronavirus outbreaks in the US could slow the US recovery if it keeps unemployment levels elevated, we need to put everything into perspective:\u00a0 the number of cases as a proportion of those tested is declining (albeit slowly) across most of the country as the new infections tend to be more localised and as we have been reporting in these commentaries, US economic data is recovering.\u00a0 In addition, fresh lockdowns have, by and large, been ruled out by US politicians.\u00a0 Furthermore, evidence from Asia and Europe suggests a second-wave isn\u2019t an inevitability.<\/p>\n<p>With reference to the potential US tariffs, while this would obviously be unhelpful to UK and EU companies as they start to emerge from the coronavirus lockdowns, the proposed $3.1bn levy on imports is a small drop in the ocean given the US imports nearly $500bn of goods from the EU and UK.\u00a0 As such this appears to simply be political posturing ahead of the US Presidential elections in November \u2013 especially as the announcement came shortly after the EU said that it was considering stopping Americans entering the region until the US coronavirus outbreak is fully under control.<\/p>\n<p>While last night\u2019s new headlines were dominated by the IMF after they lowered their 2020 growth forecast for the UK from -6.5% to -10.2% due to the coronavirus lockdowns, it wasn\u2019t a surprise to us given we have been saying in these commentaries (for example,\u00a0<a href=\"https:\/\/www2.wealthatwork.co.uk\/mywealth\/2020\/06\/12\/market-update-12th-june-2020\/\"><strong>please see here<\/strong><\/a>) that the UK economy would probably shrink by high single digits or low double digits.\u00a0 In fact, the IMF didn\u2019t actually say anything that we didn\u2019t already know \u2013 i.e. the economy has hit a brick wall thanks to the coronavirus lockdown restrictions.\u00a0 Regular readers of our commentaries, will know that this is not like a normal economic downturn as the coronavirus outbreak is a transient issue, and as such we believe that while we will experience a sharp and painful economic downturn, it should also be relatively short with a sharp acceleration on the other side of this horrible coronavirus outbreak as much of our expenditure is only being delayed \u2013 hence our view that 2021 could be one of the strongest years for economic growth since the global financial crisis in 2008\/9.<\/p>\n<p>Unfortunately, we do all need to accept that equity markets hate uncertainty and therefore volatility will remain elevated in the short-term \u2013 however, yesterday and today\u2019s moves look to us, to simply be another case of equity markets playing on the swings, not a big slide.<\/p>\n<p>In the meantime our attention is on today\u2019s US initial jobless claims and US durable goods orders \u2013 which we will update you about in tomorrow\u2019s commentary.<\/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>As global equity markets are currently trading on every news headline, the mood has quickly turned from positive to negative.\u00a0 As a result, global equity markets 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