| Please see below a useful update received from Blackfinch Group which covers this week’s events from around the world. |
| UK COMMENTARY |
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| Restrictions on social gatherings are reintroduced along with some tighter local restrictions. The government does not rule out another national lockdown if necessary. MPs voted to back the Internal Markets Bill that will give the government the power to override parts of the Brexit agreement with the EU. The bill passed by 340 votes to 263. Data from the Office for National Statistics (ONS) shows that the UK has lost 700,000 jobs since March, with a further 5 million people still temporarily out of work. Four-week grocery sales growth slowed by 8% in August, the lowest since April, with shoppers spending £155mln less in supermarkets. The data showed the impact of the hospitality sector reopening, with alcohol sales falling and personal grooming sales increasing. Inflation, measured by the Consumer Price Index, fell to 0.2% in August, from 1.0% in July, impacted by the Eat Out to Help Out scheme and the reduction in VAT on the hospitality sector. The Bank of England policy committee votes unanimously to leave interest rates on hold, noting that UK economic growth in July was around 18.5% above its trough in April, but remained 11.5% below the fourth quarter of 2019. The bank ‘stands ready’ to adjust interest rates, bond buying and other monetary policy measures if necessary. UK retail sales volume, including petrol, rose by 0.8% month-on-month in August according to the ONS, meeting analysts’ expectations. Year-on-year growth increased to 2.8%. |
| US COMMENTARY |
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| The Federal Reserve makes no changes to policy at its latest meeting, although it did guide that it intends to keep interest rates low until 2023. The central bank also implicitly ruled out the possibility of negative interest rates. Weekly initial jobless claims rose by 860,000, marginally above estimates, with continuing claims at 12.63mln. Donald Trump reportedly gives his ‘blessing’ to a partnership between TikTok and US firms Oracle and Walmart, easing talk of a ban on the service in the US. |
| ASIA COMMENTARY |
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| The Bank of Japan leaves monetary policy unchanged and upgraded its assessment of its economy, stating that data was improving after the shock caused by the COVID-19 pandemic. |
| GLOBAL COMMENTARY |
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| The Organisation for Economic Cooperation and Development (OECD) predicts that the global economy will shrink by 4.5% in 2020, better than the 6% collapse it has forecast in June. The data suggests that should the pandemic be contained then global Gross Domestic Product (GDP) will rise by 5% in 2021, but if there are major second and third waves of infection, then this will likely reduce the growth to 2-3%. Oil prices came under pressure after OPEC downgraded its outlook for global oil demand for the rest of the year and the International Energy Agency (IEA) cut its oil demand forecast for 2020 for the second month running. |
| COVID-19 COMMENTARY |
| The total number of daily cases reached new heights, but the number of daily deaths remains below April’s peak. Pfizer announce that the effectiveness of its COVID-19 vaccine could be confirmed by October. Novavax Inc announces expansion of its deal with India’s Serum Institute to produce 2bn doses of its COVID-19 vaccine annually, with all planned capacity to be brought online by mid-2021. Moderna Inc states that it may soon submit its COVID-19 vaccine for emergency authorisation for people at high-risk, should the latest trials prove at least 70% effective. We will continue to provide the most relevant articles and original blogs so please check in again with us soon. Chloe 23/09/2020 |