Please find below our Investment Market Update as at 16th June 2020.
Blue Sky Investment Market Update
Another brick in the wall
Equity markets have had a difficult few days amid fears that prices have risen too quickly, coupled with gloomy economic data and fears over a resurgence in Covid-19 cases.
As confidence began to wane, further stimulus was required and news about US monetary and fiscal stimulus has done the trick for now. Another brick in the wall of support from central banks and governments. The US is considering a $1 trillion-dollar spending stimulus on infrastructure. This follows an announcement that the US Federal Reserve plans to buy individual corporate bonds.
Following these announcements, global equities did an about turn and recovered much of the recent losses. This highlights the importance of supporting markets as investors try and pick their way through the economic damage of the last few months.
The Nikkei in Japan rose by +4.88%, helped by some of their own stimulus but this morning the FTSE 100 has also risen by +2.65%.
Infrastructure: hear it from the experts
The US announcement about their spending on infrastructure is following a theme by many developed countries. This comes on the back of huge stimulus by Germany and other EU members. Since the start of the crisis, the German government has agreed fiscal support and stimulus measures amounting to more than 30% of GDP. This is quite a reverse in fiscal sentiment from Germany. It shows the extent of the problem we are faced with and the need to stimulate the economy.
All this activity further reinforces our commitment to global infrastructure within our portfolios. We therefore thought it would be useful to hold another Webinar but this time on Infrastructure. We have teamed up with one of our investment partners, Foresight, to bring you a Webinar on the 15th July at 10.30am. Further details will follow.
We receive regular updates from LGT Vestra on developments in the Sustainable space, and I thought I would share some of the latest with you.
The crisis has exposed how fragile the financial foundations for coal have become, to the extent that some are saying that coal will never recover from this pandemic. It is fascinating to learn that as of the 10th June, the UK’s electricity grid had not burnt coal for 60 days. In the US, more energy was consumed from renewables than by coal for the first time ever and in India, one of the fastest growing users of coal, demand for the fuel has fallen dramatically, helping deliver the first reduction in its carbon dioxide emissions for 37 years.
According to the International Energy Agency we have seen the largest worldwide decline in coal consumption since the World War II.
Electric vehicle charge point market grows
The UK’s fast-expanding electric vehicle (EV) charger market is set to continue its bull run, despite the challenges presented by the Coronavirus crisis. That is the conclusion of a new analysis released recently by energy market research firm Delta-EE, which predicts the market will see a 29% year-on-year growth in charge point sales through to 2030, even as new vehicle sales slow. Recent reports have suggested that increased funding for EV charging infrastructure could be one of the key components of the government’s imminent green recovery package, alongside plans to boost EV grants and pull forward the phase out date for the sale of petrol and diesel cars.
Homes to be heated by warm water from flooded mines
A new garden village in County Durham will soon be getting its heat from a surprising source: it will be warmed from a disused mine. The temperatures are raised naturally, by heat from the Earth’s crust. The water is then pumped up from flooded shafts and used to heat the whole district using a single system. Around a quarter of Britain’s home sit on coalfields, so the potential is huge. If the project succeeds, it will help meet the UK target of virtually zero carbon emissions by 2050. It would be good news for the environment too, because heat for homes, business and industry is the single biggest contributor to UK emissions – producing almost 40% of Britain’s CO2.
Hope you’re having a good week
Gary and the Investment Team
Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.