May 18 2020

We had some good news last week as the UK economy slowly began to restart, following last weekend’s change in the Government’s messaging.

People living in England were encouraged to return to work if they could, allowed to meet a friend in a park and became able to travel relatively freely. Nando’s restaurants began to reopen for deliveries only in England, providing relief to casual diners! In Wales, parks were reopened.

We also saw the smallest increase in UK reported deaths from coronavirus since March 24th. Importantly, the fatalities trend is still falling, and whilst the fall in new cases has slowed, these come as testing numbers have dramatically increased:

Brexit worries have bubbled to the surface again as the UK and the EU remain deadlocked on trade negotiations. The chances of an agreement before a key summit in June look slim, with EU officials saying they see no reason to change tack. They believe that Boris Johnson’s administration will compromise in the face of ending the transition period on 31st December without a trade agreement, though for now, the UK is standing its ground, declining to entertain an extension. Interestingly, the latest European Central Bank baseline macroeconomic projections assume an agreement on future EU-UK trade relationships by the end of 2020.

It is perhaps an almost welcome sign of normalisation that focus has moved to these more ancillary topics (with regards COVID-19).

In markets, global equities were broadly weaker through the week in local currency terms as some profits were taken amidst still-poor macroeconomic data releases. However, the Pound fell sharply during the week versus all major currencies, meaning for unhedged UK investors, their foreign equity market returns were positive in many cases. These were led by Asia, Emerging Markets and Japan (+1.38% to +1.82%) whilst again the UK lagged other regions. The FTSE 100 fell by 2.15% and the FTSE 250 by 3.59%.

These figures are a microcosm of the year to date, as UK equities have significantly underperformed their global counterparts. This can be partly explained by currency movements and by index composition (the FTSE 100 has large weightings to both banks and energy companies), but a portion of the underperformance must be attributed to the lacklustre virus response and to the ongoing Brexit negotiation impasse.

Finally, precious metals prices enjoyed another stellar week, with the price of gold in Pounds rising by 5.21%, and that of silver by 11.12%. The asset class has benefitted from renewed investor interest in the face of increasingly extraordinary global monetary and fiscal policy interventions, and is an area we expect to see an increased focus on in the weeks and months to come.

Looking forward, as before, we hope to see a continuation of the downwards trends highlighted above, which could lead to a faster reopening and dampened economic impacts.

We appreciate that many clients will naturally feel concerned during these challenging times and at Fairstone, we believe that communication is key. As a reminder, we are here to talk about any concerns or questions you may have as well as to review your financial position. While we cannot meet face-to-face at the moment, we can chat on the phone, video call or via video conferencing.

Can I also encourage you to follow our social media platforms to keep up to date with our latest updates and news. You will find Fairstone Group on Facebook, LinkedIn and Twitter.

The value of investments may fluctuate in price or value and you may get back less than the amount originally invested. Past performance is not a guide to the future. The views expressed in this publication represent those of the author and do not constitute financial advice.

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For further information, please contact:
Andrea Barker
/ Tel. +44 (0) 191 519 6243