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Weekly Bulletin: A good week closes a resilient quarter for markets

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Investment Team

5 min read

It was a positive week for most major stock markets around the globe, making June another good month for riskier assets like shares, if a little more gentle in its ascent than April and May. 

Key takeaways

Economic data continues to deliver some welcome surprises, proving helpful to investor sentiment. The latest manufacturing sector survey data released last week pointed to universal improvement versus May in areas such as new orders, supplier delivery times and employment. Most countries remain in contractionary territory, though less so than in the prior month, but France, Ireland, the UK, China and Brazil had positive readings indicating some expansion versus May.

  • The latest US employment report also offered a positive headline figure, with 4.8 million jobs added during June (versus expectations of 3.2 million). This is reassuring, but history suggests that it will take a meaningful amount of time for unemployment levels to recover fully, and we remain wary of potential increases in permanent layoffs beneath the positive headline figures.

  • In COVID-19 news, continued improvement has taken place in the UK in terms of confirmed new cases of the virus. As pubs and restaurants reopen, only time will tell if this can continue. Meanwhile, a pickup in new cases within the US is concerning, with states like Florida and Texas seeing particularly aggressive growth in new cases. Slightly further south, Latin America has become the epicentre for the pandemic, with half of all daily deaths for the virus. Even more worryingly, some reports suggest that official numbers may actually be understating the reality.

  • Nevertheless, new COVID-19 deaths have continued to fall at a global level, despite the recent increase in confirmed cases. Possible explanations include a time lag (between infections and a rising death toll), shifting demographics (those catching the disease may be younger and healthier as economies reopen but vulnerable groups remain cautious), and improving medical techniques for treating the virus.

  • More targeted, localised lockdown conditions in places like Beijing and some US states may also be helping to lessen the impact of a second wave. The effect of these additional spells of lockdown on economic recovery remains to be seen.

Weekly market moves

  • All major stock markets performed well over the past week, with the exception of Japan which ended the week in negative territory.

  • The US and China’s markets fared better than most, helped by better-than-expected US employment data and positive economic updates from China.

  • Oil prices moved up sharply over the week. As oil supply levels catch up with the recent shock to demand, OPEC production levels are now at their lowest since 1991.

What to look out for this week

  • Rishi Sunak, the UK chancellor, is expected to present an economic update to the House of Commons on Wednesday. His speech could include details on planned government spending packages.

  • Brexit negotiations continue this week, following reports of serious divergences between the two sides in recent days.

  • The weekly US jobless claims update is due on Thursday, and could add more colour to recent employment data.

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Investment Team

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