Please find below our “Weekly Market Update” as at 21st February 2020
Blue Sky Comment
All this bad news, yet investment markets prove resilient.
This week, we wanted to just step back from the news and give a broader perspective as to why we haven’t seen a major downturn across investment markets, with the Coronavirus particularly, beginning to weaken global growth.
Bad, but not as bad as first feared
Despite the intensity of news reporting, you will no doubt have noticed that the Coronavirus is no longer fronting the news on TV & Radio. Sure, we have had awful
floods but there is no doubt that the increase in the daily rate of new cases appears to have slowed, with deaths relatively low outside of China.
Chinese stimulus
Whilst it is expected that China’s first quarter GDP will be halved, the injection of RMB 1.7 trillion into the banking system has boosted confidence, globally. It would appear that the Chinese government will do ‘whatever it takes’ to restore confidence in the economy.
Encouraging data
The above coincides with indications that economic trends may be improving across Europe and the US. The Manufacturing Purchasing Managers’ Index took the markets by surprise, with strong data which was also supported by other data.
What’s happening at home?
We mentioned fiscal stimulus in our update last week and we anticipate this being supported in the budget on the 11th March. As LGT Vestra reported this week, “the fiscal multiplier effect of public infrastructure projects can be immensely powerful and should help to improve productivity, generate jobs and encourage inflation”. This should be beneficial to domestic companies and in turn, their share price.
Have a good weekend
The Blue Sky Investment Team
