Markets have been rather mixed as we move towards high summer; perhaps this reflects the somewhat mixed weather we are experiencing. While the easing of lockdown measures at the weekend undoubtedly helped sentiment here, the strong words from the Chinese ambassador put something of a dampener on proceedings. As we approach our departure from the European Union, nobody wants a trade war with a powerful nation like China.
In the United States shares have been remarkably buoyant, led by technology stocks. However, many states have had to reverse easing measures that were introduced arguably too soon. The picture around the rest of the world is similarly mixed. The Brazilian president Bolsonaro has tested positive for coronavirus; localised lockdowns have been put in place in Australia and Spain, not to mention Leicester. It is becoming clear that this pandemic is likely to change the face of society dramatically all around the world.
The picture at home
The Chancellor of the Exchequer has announced more measures to help the economy back onto its feet. Job losses are now being announced on a daily basis across a wide range of businesses, so much of Chancellor Sunak’s efforts are being targeted at stimulating the jobs market. Nevertheless, it is hard to see unemployment not rising significantly as a result of the difficult conditions that beset our economy.
That said, not all the economic news is bad. China appears to be recovering more swiftly than many expected. Some of the leading economic indicators in Europe are more encouraging than we had any reason to hope for. Not that Europe is a one-way street, with the European Commission expecting a deeper recession for the euro bloc this year and forecasting a slower recovery in 2021. France Italy and Spain are singled out as likely to see a contraction in GDP of more than 10% this year, although prospects for Germany appear to have brightened a little.
There will undoubtedly be winners and losers in the unsettled conditions in which we find ourselves. Presently technology seems to be the outright winner, though I fear we can expect more attention from governments on how these data gatherers behave, given the increasing power they now have. We have much to travel through in the months ahead. But, in the end, it will be how swiftly we adapt to the new normal that will determine how the recovery develops.
About the author
Brian Tora, who is a respected writer and broadcaster on investment issues, is a consultant to JM Finn. Brian has enjoyed a long and distinguished career in the City. Any opinions expressed are his own and should not be construed as advice from JM Finn. A version of this article may appear elsewhere in the press.