Market Update: Stock markets notch up strong second quarter

Market Update: Stock markets notch up strong second quarter

6th July 2020

Last Week - Key Takeaways

Markets: Improving outlook boosts shares

  • Global stock markets ended the week higher having chosen to focus on the economic recovery from the coronavirus crisis rather than lockdown restrictions returning in several countries;
  • Although new cases emerged in the US, the UK and elsewhere, there were encouraging signs from the US and Chinese economies (see below), while reports of further progress towards developing a vaccine also improved the outlook.
  • Omnis view: In the second quarter, shares recorded the strongest period of growth in over 20 years, as the unprecedented measures introduced by governments and central banks helped them rebound from the correction in February and March. New infections could slow the recovery, but additional steps are expected to be announced shortly, which should continue to support the markets.

US: Employment recovery continues

Asia: Busines activity climbs in June

  • Activity in China’s services sector, which includes some of the companies hit hardest by social distancing rules such as restaurants and hotels, rose sharply in June.
  • Omnis view: China was among the first countries to lockdown its economy to contain the spread of the coronavirus, and the markets have been closely monitoring its easing of restrictions. While new cases have emerged, the increase in business activity is encouraging for the rest of the world.

Europe: Job losses slow in May

Brexit: Latest talks end in stalemate

  • The latest round of Brexit negotiations concluded without any breakthroughs, although the EU hinted it was willing to make concessions about the contentious issue of the role of the European Court of Justice after the UK leaves the EU.
  • Omnis view: As things stand, Brexit uncertainty seems likely to linger for the foreseeable future. The Prime Minister has set an unofficial deadline of the end of this month for progress, while the EU claims the two sides need to finalise a deal by October to give member states enough time to approve it. Talks continue this week.

LOOKING AHEAD - TALKING POINTS

Economic data

  • Thursday- Chinese inflation (the rate at which prices rise) in June.

Summer statement

  • Chancellor Rishi Sunak announces his latest plans to help the UK economy recover from the coronavirus crisis on Wednesday.

 

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This update reflects Omnis’ view at the time of writing and is subject to change.

The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your Openwork financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given.