Sep 21 2020

The 7-day moving average of new cases in the UK has risen to 3,679 as of 20th September, up from a low of 552 in July, as the Government warns of further lockdowns in increasingly strident tones.

New restrictions for large parts of England’s North West, West Yorkshire and the Midlands will come into effect this week, with the Chief Medical Officer, Professor Chris Whitty giving a televised press conference on 21st September alongside Patrick Vallance, the Chief Scientific Adviser, warning that the spread of the virus is ‘heading in the wrong direction’, and that Britain faces a ‘very challenging winter period’.

In addition, the Prime Minister is expected to threaten curfews on pubs and bans on households socialising if the public does not follow strict self-isolation and social distancing rules. These remarks come just a couple of weeks after the UK workforce was being encouraged to return to offices and resume normal activities.

Looking at the underlying data, while case numbers have risen sharply from their lows, so have testing numbers despite well-publicised bottlenecks. Daily new hospital admissions have also risen from their lows but so far by very little per the first chart below, and total hospital patients with COVID-19 has risen by even less per the second chart below, suggesting a relatively consistent treatment and discharge rate:

The fatality rate has remained very low, with the 7-day moving average currently sitting at 21, as of 20th September. This may rise but there is of yet little evidence to suggest we are set for another episode as seen in March and April. One reason for this may be that this time, a significant proportion of new cases have been found in younger people, with the ONS Infection Survey Pilot showing that elderly cohorts have not yet seen a large rise in infections:

As always, there are caveats with this data given its small sample size and other factors such as rates of ‘false positives’ in the PCR COVID tests. This continues to point towards hospitalisation data being the clearest indicator as to whether drastic action needs to be taken.

UK employment data for August was released last week which showed nearly 700,000 jobs lost since March; slightly more positive than expected as prior months’ numbers were revised upwards. This also means that the overwhelming bulk of the 3 million or so workers that have probably come off the furlough scheme since June are going back to their jobs rather than into unemployment or inactivity.

There has been a disproportionate hit to youth employment, with those workers aged 16-24 losing 156,000 jobs over the last quarter. This reflects the share of young workers in hotels, restaurants and bars; sectors all impacted by the pandemic, and mooted for further support when the furlough scheme runs out in October.

More positively, UK retail sales rose again in August by 0.8% month on month, with sales rising across all of the store-based categories. This puts the data point now 4% above its pre-pandemic level, with the Bank of England providing further positivity last week, stating that the recovery was running hotter than its August forecast had predicated.

In markets, weaker performance in technology shares pushed US stocks to a 6-week low as investors searched for new catalysts to give direction to global markets. The S&P 500 fell by 1.97% for the week in Pound terms to be the worst performing region during the week; not helped by a continued lack of clarity around another stimulus package and a weaker Dollar versus the Pound (-1.25%).

Emerging market, Asian and Japanese equities were the top performers, with gains of 0.19%, 0.36% and 0.61% respectively. Far Eastern markets in particular continue to outperform, led by China where virus management has been superior.

The UK’s FTSE 250 eked out a positive 0.10% gain, while the FTSE 100 fell by 0.41% partly due to the stronger Pound.  European equities were weaker with a 1.01% loss as fears rose of renewed concerted lockdowns in response to increased cases. This weakness has leaked into the start of the current week with all equity markets sharply lower.

Government bonds gained, with Gilts rising by 0.63%, though credit markets also posted positive returns. Gold and Silver prices rose by 1.01% and 0.73% respectively, with associated mining stocks rising more strongly.

Moving forward we see the principal risk to markets being overwhelmingly linked to further national lockdowns. As we have said before, countries’ recoveries are treading a fine line, with consumer and business confidence still very much dependent on fiscal and monetary policy support. Financial support schemes are in many cases being wound down despite many sectors of the economy operating at stall speed. There are certainly still reasons to be positive, but they risk coming undone should there be a policy misstep.

You will find Fairstone Group on Facebook, LinkedIn and Twitter. You can also receive weekly market updates straight to your inbox by signing-up at

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.

Share this article


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