{"id":2065,"date":"2020-08-12T11:21:45","date_gmt":"2020-08-12T11:21:45","guid":{"rendered":"http:\/\/www.wealthatwork.co.uk\/jpm\/?p=2065"},"modified":"2020-11-18T09:34:24","modified_gmt":"2020-11-18T09:34:24","slug":"market-update-12th-august-2020","status":"publish","type":"post","link":"https:\/\/www2.wealthatwork.co.uk\/jpm\/2020\/08\/12\/market-update-12th-august-2020\/","title":{"rendered":"Market Update \u2013 12th August 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\/J5pCjZ0O-I4?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>This morning\u2019s headlines have been concentrated on the UK\u2019s Q2 GDP data, which showed the UK economy contracted by 20.4%.<\/p>\n<p>Although this shouldn\u2019t have come as a surprise, as we could all see that the coronavirus lockdowns shut much of the economy down, there have been plenty of negative headlines, especially comparing our 20.4% contraction to that of say Germany (which contracted by 10.1%); France (-13.8%); Italy (-12.4%); and Spain (-18.5%).<\/p>\n<p>While we can\u2019t dispute the UK\u2019s weak relative Q2 performance, these are not simple apples-to-apples comparisons.\u00a0 Italy and Spain were both impacted by the coronavirus much earlier than the UK, meaning that their Q1 GDP contraction was much bigger than the UK\u2019s.\u00a0 Additionally, the UK had a relatively long lockdown \u2013 for example, while Germany went into lockdown at roughly the same time as the UK, they started easing their restrictions nearly a month before the UK.\u00a0 Also, as the consumer accounts for around 60% of the UK economy, compared to just over 50% in Germany, the closing of shops and restaurants had a much bigger economic impact.<\/p>\n<p>Moreover, there are also plenty of positives to draw from today\u2019s data.\u00a0 For example, the economy appears to be recovering quicker than even we expected (and we have been among the most positive commentators) as the UK economy expanded by 8.7% in June.\u00a0 Additionally, May\u2019s growth was revised up to 2.4% from 1.8% and April\u2019s contraction was revised to 20% from 20.3% \u2013 and equity markets have this morning given their seal of approval to these positives, as the FTSE-100 is, as we write, up around 50 points, or 0.8%.<\/p>\n<p>In addition, given pubs and restaurants reopened in July (and judging by the success of the government\u2019s \u2018eat out to help out\u2019 scheme so far in August), we expect GDP data for July and August will also look very good.<\/p>\n<p>However, despite this positivity, we still believe that the UK needs further monetary stimulus and as such the BoE will cut UK interest rates and\/or increase QE, as health, employment and Brexit concerns are likely to keep a lid on consumer spending \u2013 for example, as the government\u2019s job retention (furlough) scheme is now starting to be wound down (and ends completely on 31 October 2020), unemployment is likely to rise sharply in the coming months.<\/p>\n<p><strong>Investment Management<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n  <\/div> ","protected":false},"excerpt":{"rendered":"<p>This morning\u2019s headlines have been concentrated on the UK\u2019s Q2 GDP data, which showed the UK economy contracted by 20.4%. Although this shouldn\u2019t have come as [&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\/2065"}],"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=2065"}],"version-history":[{"count":2,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2065\/revisions"}],"predecessor-version":[{"id":2135,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2065\/revisions\/2135"}],"wp:attachment":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/media?parent=2065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/categories?post=2065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/tags?post=2065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}