Global stock markets have enjoyed a relatively calm week: a balanced mixture of both positive and negative news has had the effect of limiting gains as well as losses on most indices. On the plus side this week, there has been a new round of encouraging early-stage coronavirus vaccine news: on Monday, medical journal The Lancet published an initial review of the Oxford vaccine trials1, which suggested the treatment was proving effective enough to move forward to the next step in the research process. Pharmaceutical firms Pfizer and Synairgen both reported hopeful progress. Another factor driving prices higher – on this side of the Atlantic in particular – was the news that European leaders had finally managed to agree a €750 billion stimulus deal to support economies in their recovery from the Covid-19 pandemic. Crucially, this package will allow European Union members to borrow collectively – a measure that had been strongly opposed by several of the more financially disciplined EU states such as the Netherlands and Austria. And with earnings season in full swing following the end of the first six months of the year, there were a number of positive reports from businesses that had managed to survive and even thrive during the pandemic to date. On the downside, however, investors still have serious concerns about the spread of coronavirus in the United States as well as the potential consequences of second waves of infections in Europe. In addition, tensions between Washington and Beijing are only increasing in the wake of China’s decision to impose a strict new security law in Hong Kong. This situation is likely to damage trade not just between the two countries, but also on a global scale.
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Tke UK and Europe
In the UK, the FTSE 100 had lost 1.3% of its value by the close of trading on Thursday, dragged slightly lower by concerns over international trade as well as news that Brexit negotiations seem to have reached their latest impasse. There were some bright spots this week, however. Employers’ organisation the CBI said British manufacturers had become more positive about the immediate outlook2 , while there were solid earnings reports from Kingfisher – owner of the B&Q DIY chain – and Unilever, both of which said they had benefited from changes in consumer buying behaviour during the UK lockdown period. In Europe, Frankfurt’s DAX continued to be the Continent’s star performer, up 1.4% for the week by close on Thursday and buoyed by the news of the EU pandemic support deal. Having broken through the 13,000-point barrier this week, the index is now higher than it was at the end of 2019 – a measure of how Germany has managed to respond to the crisis.
17/7/2020 | 23/7/2020 | Change (%) | |
|---|---|---|---|
FTSE 100 | 6290.3 | 6211.4 | -1.3 |
FTSE All-share | 3472.7 | 3441.6 | -0.9 |
S&P 500 | 3224.7 | 3235.7 | 0.3 |
Dow Jones | 26672.0 | 26652.3 | -0.1 |
DAX | 12919.6 | 13103.4 | 1.4 |
CAC-40 | 5069.4 | 5033.8 | -0.7 |
ACWI | 548.1 | 552.5 | 0.8 |
