In terms of exit strategies, EU leaders approved the guidance from Brussels which set out three criteria on how and when to end restrictions, including: a stable and significant decline in the spread of the disease; appropriate health system capacity; and the availability of widespread testing and tracing systems to monitor future outbreaks.
The Eurozone purchasing manager indexes (PMIs), where activity dropped at its fastest pace on record, were a mirror of those in the UK. In addition, the UK’s March retail sales saw their biggest monthly fall since records began, dropping 5.1%, while CPI numbers fell to 1.5% year-on-year as disinflationary pressures from weak demand started to come through.
There was some disappointing news in terms of a potential treatment last week. A trial of the drug made by Gilead showed that it did not improve the condition of COVID-19 patients or reduce the level of blood-borne pathogens, as well as causing significant side effects in some. This left scientists and investors disappointed.
On Wednesday 22 April, President Trump followed through on a threat to suspend immigration into the US by signing an order preventing people from applying for green cards for 60 days, and possibly longer.
Meanwhile the Q1 corporate earnings season clearly showed the effect of the shutdown, with Delta Air and United Airlines, as examples, announcing huge pre-tax losses. Even Coca-Cola, long regarded as less vulnerable to recessions, saw sales drop by 25% quarter-on-quarter. Meanwhile, the latest filing for US unemployment benefits saw claims increase by 4.4 million, down from 5.2 million the previous week, but bumping the total to a new record of 26 million.
On Tuesday 21 April, the US passed a US$484 billion interim relief package which should replenish funds for emergency small business lending and shore up national coronavirus testing.
EU leaders endorsed a short-term €540 billion package on Thursday and agreed to develop a ‘recovery fund’ to support governments with limited fiscal ammunition.
However, there were no indications about the size of that fund or whether it will be made up of loans or grants.
In terms of other news, and as we noted in Thursday’s update, US oil prices crashed into negative territory for the first time in history on 20 April, settling at under -$37 a barrel.
The news resulted in the MSCI All Country World Index ending down -0.9% in sterling terms, and -2.0% in US dollar terms. Friday then saw the US market up while other markets were down. Results remained mixed at the sector level too. Some cyclical industries, such as energy and materials moved higher from their lows, although others continued their downward trend, including financials and real estate. Some defensive sectors, such as healthcare and communication services, also continued to perform well.
What’s interesting to note is that even though we’ve seen a fairly spirited bounce in markets from the lows, it hasn’t been led by the sectors and styles that have particularly underperformed, and there continues to be a focus on high quality investments.
Many American states are set to reopen, while a number of other G10 countries are also contemplating exit measures. This represents a window of hope for global economic activity, although any second waves of infections would lead to further economic disruption.
In terms of economic data, the focus remains on weekly US jobless claims data published on Thursday as it is the most real time economic release. The Federal Reserve meeting may also result in more support for businesses via monetary measures, while the European Central Bank meeting should result in some much awaited support, particularly for those countries hardest hit.
More purchasing manager numbers will be published this week. China’s numbers, on Thursday 30 April, will give us an indication of how its economy has recovered as the lockdown was eased. Friday sees the release of the final PMIs from Japan, the UK and the US, and there’s also the ISM manufacturing reading from the US.
The euro area and US release Q1 GDP this week. Expected to be poor, they won’t show the full effects given widespread lockdown only really started in March. The euro area flash CPI estimate for April on Thursday 20 April should give us some idea as to how downward pressure from energy prices is affecting overall numbers.
Last but not least, the corporate earnings season is now in full swing, with 173 of the S&P 500 companies reporting, including a number of big names, such as Apple, Amazon, Alphabet (Google), Visa and Merck just to name a few.
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David is responsible for spearheading the growth of our wealth management business across the company’s international jurisdictions. Prior to taking on his current role, David was integral in developing the bank’s investment proposition for high-net-worth individuals, trustees and investment consultants. He is also a member of the bank’s executive committee.
He has over 25 years’ experience working for global blue-chip companies in both London and Jersey, and providing investment solutions to a wide variety of clients around the world. Prior to joining Nedbank Private Wealth, David spent 15 years with RBC Wealth Management where he held several senior roles, latterly leading the investment business as managing director and head of discretionary investments in Jersey.
David is a Chartered Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.
David is responsible for spearheading the growth of our wealth management business across the company’s international jurisdictions. Prior to taking on his current role, David was integral in developing the bank’s investment proposition for high-net-worth individuals, trustees and investment consultants. He is also a member of the bank’s executive committee.
He has over 25 years’ experience working for global blue-chip companies in both London and Jersey, and providing investment solutions to a wide variety of clients around the world. Prior to joining Nedbank Private Wealth, David spent 15 years with RBC Wealth Management where he held several senior roles, latterly leading the investment business as managing director and head of discretionary investments in Jersey.
David is a Chartered Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.
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The week of 26 April saw markets start off relatively strongly on the back of positive news on exit strategies and potential treatments. However, by Friday, the tide had turned due to weak corporate and economic data filtering through, while Trump sought to re-escalate tensions with China.
The week of 20 April again saw mixed market sentiment. The negative news focused on plummeting oil prices, disappointing trial COVID-19 treatment results, US travel restrictions, poor corporate earnings and weak economic data. The positive stories centred on further talk of exit strategies and a general slowdown in global case numbers.
David McFadzean was joined by Andrew Yeadon to talk through the main Q1 2020 news driving markets, portfolio positions and what we expect may take place in Q2 2020 and beyond.
The week of 14 April saw mixed market sentiment as the impact of the COVID-19 weighed on corporate earnings results and economic data releases, while further talk of exit strategies and progress on a possible treatment provided some relief.
Last week – the week of 6 April – saw positive market sentiment and markets rise in value with the narrative focused on the slowing rates of growth in the number of new COVID-19 cases in parts of Europe and the US, enabling attention to shift to possible exit strategies from the lockdown and economic activity being kick-started. Unfortunately, we believe markets are being overly optimistic. Economies will struggle to reopen fully anytime soon given the need for increased hospital capacity, widespread testing, improved patient treatment, and, ultimately, the delivery of a vaccine.
Financial markets have always been prone to react quickly, sometimes intensely, to news flows as they try to price in potential disruption to or support for economic activity.
With the coronoavirus pandemic, the focus for many people is on the short term. Retirement planning is still important, but why is now actually a good time to think things through?
The week starting 23 March saw governments and central banks around the world continue to take further steps to counteract some of the impact of the economic shutdown stemming from coronavirus.
During our 19 March webinar, David McFadzean, our head of investments, discussed recent events linked to the coronavirus pandemic with Simon Watts, our senior investment analyst. Due to the number of questions asked during the webinar, we have put together this Q&A, grouping questions together where possible, and using the information available at the time.
2019 marked the 25th anniversary of the opening of Nedbank Private Wealth’s Jersey office. Your memories of 1994, if any, are likely to depend on your interests or predilections at the time or since.
Investment performance is sometimes reported before fees and charges are taken into account and sometimes after everything has been paid, i.e. net of fees.
We publish our total expense ratio to flag to investors exactly what they pay when investing in our portfolios. However, we include costs that others don’t always include.
We operate in a really competitive industry. It’s one of the reasons why some people find it difficult to choose an investment manager – there’s such a huge choice! We believe there are five key points you need to consider when making your selection.
Unlike tossing a coin, portfolio management is not a game of chance and the risks are not usually 50/50. There is a huge range of potential investments to choose from and a professional wealth manager should be able to demonstrate consistent results over a long period with a greater success rate than 50%.
The news flow on the COVID-19 coronavirus took a more negative tone over the weekend of 22/23 February, and we have started this week with a sizeable risk-off move.
The week starting 9 March saw markets opening in disarray, with investors reacting negatively to news that the OPEC+ talks had broken down and the Saudis had sparked an oil price war with Russia over its refusal to cut production. That led to a 30% fall in the price of oil. The biggest impact will be in the energy sector, but it was also taken badly by the broader market.
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