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Weekly Market Update: 1 April 2020

April 2020

by Alex Brandreth

Global stocks markets have moved higher over the last week, following the huge economic, business and individual support packages, announced by governments around the world. This news comes as we draw to a close the most dramatic quarters in society and financial markets, since the Financial Crisis. The economic impacts of the COVID-19 outbreak continue to be felt. In the US last week, it was announced that the number of Americans filing for unemployment has surged to a record high, as the economy goes into lockdown, due to the coronavirus pandemic. Nearly 3.3 million people registered to claim jobless benefits for the week ended 21 March, according to Department of Labor data. That is nearly five times more than the previous record of 695,000 set in the recession of 1982.

Back in the UK, the Chancellor, Rishi Sunak, announced last week further support for millions of self-employed individuals. Many affected self-employed workers will receive direct cash grants, though a UK-wide scheme, to help them during the coronavirus outbreak. Self-employed individuals and members of partnerships in the UK could receive up to £2,500 per month in taxable grants for 3 months. The scheme will be open to those who traded in the 2019-20 tax year, are still trading now or would be except for COVID-19, and are planning to continue doing so in the tax year 2020-21. Also, their a self-employed trading profits must be less than £50,000 and more than half of their income come from self-employment.

For more information on claiming a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme please visit the following website;  https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Other key developments over the last week include the news that the Prime Minister and a number of senior individuals in Cabinet, have tested positive for the Coronavirus. This led to some modest weakness in sterling, as investors were nervous about how this news would impact the UK economy. At the weekend, Fitch, an international credit rating agency, downgraded the UK’s credit rating and stated “The downgrade reflects a significant weakening of the UK’s public finances, caused by the impact of the COVID-19 outbreak and a fiscal loosening stance that was instigated before the scale of the crisis became apparent”. Interestingly, Fitch have also been the first rating agency to highlight what potential impact the Coronavirus is having on the economy, with their prediction of economic growth dropping nearly 4% in 2020.

Our habits and behaviours are changing. Businesses and individuals are adapting to this new environment – some businesses will flourish others will come under pressure. Both BrightHouse and Carluccios have filed for administration following on from the impact on their businesses in recent weeks. On the flip side, it was announced this week that March has been a record month for the Supermarkets, with consumers spending a whopping £1.9 billion extra compared to the same time last year.

Alex Brandreth, Chief Investment Officer

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