Market Outlook Report – September 2020

Market Overview

UK inflation hits 1% in July as lockdown restrictions ease

As global economies continue to emerge out of lockdown, a promising recovery in oil, clothing and footwear prices has caused a jump in inflation to 1%. This exceeded expectation of Bloomberg economists who had predicted a rise of 0.7% in July.

Relevance/ Impact 

US S&P 500 Index reaches new high

US stocks have performed remarkably well over the last few months, despite the economy shrinking, with a record-breaking bull run in the months preceding March. The S&P 500 is regarded as the best representation of the US stock market, measuring the performance of 500 of the largest US traded companies. On Tuesday the Index set a new record of 3389, regaining and exceeding heights not seen since early February.

Relevance/ Impact 

UK officially in recession for first time in 11 years

The UK is officially in recession after the economy suffered the largest decline ever recorded in Quarter Two as the lockdown measures forced the world to close down. PM Boris Johnson, has warned that the UK has a "long, long way to go" before the economy improves due to further figures showing the biggest drop in employment in over a decade.

Relevance/ Impact 

A year without precedent

Markets have had a great deal to negotiate this year. Looking forward, the final quarter is likely to be volatile, both in terms of economic activity and also geo-politics. At the time of writing, it is virtually impossible to predict the outcomes of, for example, the US elections, any development regarding Covid-19 or the US/China trade talks. Of course, this will not stop commentators from attempting to make convincing forecasts and these are likely to cause global asset prices and currencies to move in unexpectedly surprising directions.

Relevance/Impact

UK remains hopeful in reaching an EU trade deal

According to Downing street, the UK believes it can agree a trade deal for after it leaves the EU at the end of this year. Both sides remain particularly divided on fishing rules and transport cooperation however this week is the last scheduled set of negotiation meetings before the Autumn. The December deadline is looming, and an extension has been ruled out by the UK.

Relevance/ Impact 


Disclaimer: This document represents the opinion of Reeves Independent only and is not intended as advice and no investment decisions should be made solely on the back of this email. Always seek independent financial advice before taking any action. Past performance is not a guide to future performance. All investments carry the risk that you will get back less than you put in.

Sources:

Gold shoots above $1,800 for first time since 2011; https://www.ft.com/content/b5d9e57f-74f6-4445-88bb-ca6ddff20525

Oil prices edges up on weak dollar, U.S.-China tensions weigh;  https://www.reuters.com/article/us-global-oil/oil-prices-edges-up-on-weak-dollar-us-china-tensions-weigh-idUSKCN24P04M

Weekly Market Round Up; https://www.psigma.com/psigma-voice/weekly-roundup/

Coronavirus vaccine: UK government signs deals for 90 million doses; https://www.bbc.co.uk/news/health-53469269

Government to develop £100m Covid-19 vaccine manufacturing centre; https://www.theguardian.com/world/2020/jul/23/government-to-develop-100m-covid-19-vaccine-manufacturing-centre

New study reveals Oxford coronavirus vaccine produces strong immune response; https://www.ox.ac.uk/news/2020-07-20-new-study-reveals-oxford-coronavirus-vaccine-produces-strong-immune-response

Brussels to warn time is running out for Brexit deal; https://www.ft.com/content/272974a2-1d25-4a1a-aab4-b4bcfe2bbc3a

Fears EU-UK trade talks will bear no fruit until autumn; https://www.ft.com/content/38223a68-c6b6-46e9-847e-f112af552a0e

Post-Brexit deal: What's happening in the UK-EU talks?; https://www.bbc.co.uk/news/uk-politics-53518641

Cornoavirus: UK economy has 'clawed back half of lost ground'; https://www.bbc.co.uk/news/business-53473616

'V' good? How Britain's economic recovery is shaping up; https://uk.reuters.com/article/uk-health-coronavirus-britain-economy-gr/v-good-how-britains-economic-recovery-is-shaping-up-idUKKCN24O24F

UK economy rebounds more slowly than expected; https://www.bbc.co.uk/news/business-53400721

UK economic recovery tracker: what the latest data on activity are signalling; https://www.ft.com/uk-econ-tracker

Markets are right to be nervous about the US election; https://www.ft.com/content/af5ee2c0-d53c-4437-8b98-5e8341ffbcf5

How The Markets Will React To The 2020 Election; https://www.forbes.com/sites/simonmoore/2020/07/18/how-the-markets-will-react-to-the-2020-election/#44b9ff4b5ee1

Chinese GDP grows 3.2% in second quarter; https://www.ft.com/content/4a0f9dca-b48c-453f-bfc1-2c6c8b55682a

China GDP: first major economy to show a recovery from coronavirus damage with 3.2 per cent growth in second quarter; https://www.scmp.com/economy/china-economy/article/3093371/china-gdp-economy-avoids-recession-second-quarter-growth-32

Coronavirus: Chinese economy bounces back into growth; https://www.bbc.co.uk/news/business-53399999