Market update from our co-CIO, Matthew Singleton
Financial markets have largely ended the week flat although, with a reasonable amount of volatility during the week itself. Research from past crashes would detail that increased levels of volatility will remain for some time. Even if that overall volatility can change from negative to positive day to day.
Currently the argument markets are having which is causing these daily movers are:
Are we going to have a second spike of COVID19 cases across the world?
If we do what does that do to the economy?
Will there be another shutdown?
Continued support from the FED and other central banks. “This isn’t going to be a V shaped recovery. It will take time however, the economy will recover and we will be there every step of the way to assist the recovery” Jerome Powell Fed Chairman
Finally, the wildcard that a vaccine could be found.
In the short term markets are going to continue to have this argument however, in the end the markets will recover and so will the economy. It’s not if it’s just when.
Major Market Movements Week to date.
|GBP v USD||+0.2%|
|GBP v EUR||-0.2%|
Thoughts and opinions of our co-CIO & Managing Director, Mark Parello.
A welcome move for those of us sporting longer hair and missing a drink with our mates.
The UK government is relaxing the current two-meter distancing rule to one meter plus in England. The new guidance comes into effect as of 4 July. At the same time, numerous venues will be allowed to reopen in England, including pubs, museums, cinemas, hotels, campsites, and hairdressers. Also members of two separate households will be allowed to meet in any setting, including indoors.
While certain demographics will certainly have to be more cautious, any move towards opening the economy further is good news for businesses and those working for them.
As economies continue to relax social distancing measures, it’s hard to imagine there will not be an increase in COVID cases. The US on Thursday saw a record number of daily new cases recorded. You would assume this would have made investment markets freefall, however the opposite was true. On Thursday, US markets staged a late-day rally, with investment markets are pricing in that governments have done whatever it takes to protect businesses and the market, which is expected to continue.
Now we are past the halfway point of the year, talk is now turning to Brexit again. UK and Europe hope to have a deal worked out by October at the latest, but I believe this to be unlikely – we will continue reporting on this in more detail as we learn more.
Have a great weekend.
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