Market Outlook Report – November 2020

Market Overview

Further lockdown restrictions across the UK

Amid rising numbers of new Covid cases in the UK, Boris Johnson announced a new local lockdown tier system mid-way through October in an attempt to slow the spread. The system determines the severity of restrictions depending on the ‘alert levels’ of a region ranging from medium, high and very high. The government is hopeful this system will be effective in reducing the spread of the virus, while avoiding another full-scale nationwide lockdown which wreaked havoc on the UK economy.

Relevance/ Impact 

Sterling jumps on back of Brexit news

The pound experienced its biggest rally since March as talks between UK and Brussels showed some promise. Michael Barnier, EU Chief Negotiator, stated that a trade deal was within reach if compromises could be agreed.  This announcement alongside the intensive talks the UK has promised allowed for sterling to rally further.

Relevance/ Impact 

US elections draws closer

With the November election quickly approaching, investors eagerly await some clarity on who will ultimately be in charge in early 2021. Polling data suggests that voting intentions sway in Biden’s favour, however we must not forget how the same was said about Hilary Clinton in the last election and we all know what happened there. We could yet see a further 4 years of Trumps presidency if history repeats itself.

Relevance/ Impact 

Why is the second wave appearing less lethal?

Amongst all the doom and gloom surrounding news reporting, there are some positives to be found. Across Europe we have seen spikes in new Covid cases, representing the ‘second wave’ that has worried investors and the general public alike. The chances of recovery have however seemingly improved from the first wave, with cases resulting in hospital stays or even mortality slowing.

Relevance/Impact

Is life in China back to normal?

With a population of 1.4 billion, China now only records around a dozen Covid cases daily. When comparing this to European countries still struggling to contain the virus such as the UK reporting 20,000+ cases daily, there is a stark difference. As such life is back to relative normality in China, with the economy posting growth amidst lockdowns & recessions across Europe.

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:

BBC News (21st October) Covid: Greater Manchester given £60m support package https://www.bbc.co.uk/news/uk-england-manchester-54628770

Chronicle (12th October) Boris Johnson announces new three-tier lockdown system https://www.chroniclelive.co.uk/news/north-east-news/boris-johnson-announces-new-three-19091094

FT (21st October) Why the second wave of Covid-19 appears to be less lethal https://www.ft.com/content/b3801b63-fbdb-433b-9a46-217405b1109f

Independent (12th October) Winter is coming: Is coronavirus going to get worse? https://www.independent.co.uk/life-style/health-and-families/coronavirus-second-wave-winter-uk-lockdown-boris-johnson-b512355.html

Guardian (19th October) China's economy was first in to Covid crisis – and is first out https://www.theguardian.com/world/2020/oct/19/china-economy-covid-crisis-beijing

FT (19th October) Chinese economy expands 4.9% in third quarter https://www.ft.com/content/22108ddd-3280-4013-bcd8-1adc9e6ae13d

FT UK pound jumps by most since March on Brexit progress   https://www.ft.com/content/74079480-2db5-4c3f-b9ae-bae3516dc084