Welcome to the latest in our weekly client updates – with just three weeks to go before Christmas.
In Jersey it looks like being a sobering Christmas as Chief minister, John Le Fondre announced on Wednesday evening a raft of measures aimed at stemming a sudden spike in cases of Covid -19. All pubs, restaurants and nightclubs were ordered to close for up to a month with effect from midnight last night. Gyms were also closed and any indoor sports classes must cease with immediate effect. 2 metre distancing has also been reintroduced with effect from today and employees have been asked to work from home if possible. The Mandatory wearing of protective face masks in all public places such as shops, buses and taxis also became effective from earlier this week.
The measures announced received wide spread criticism from islanders who said it was ‘too little too late’. Many questioned why the measures had not been brought in sooner in order to ‘save our Christmas’. The Chief minister said “ We are seeing more cases in hospital and a continuing growth of positive cases in the community. The current R-Rate is between 1.4 and 1.9 which effectively means that, on average each case is passing the infection on to more than one person. This is too high and we have introduced these more stringent restrictions to protect islanders.
However in a move that has been heralded ‘the most exciting news of the pandemic’ initial vaccine supplies could be available in the island as early as next week as the Pfizer jab was given approval by UK regulators. Jersey which shares the UK’s regulatory process and supply chain, should be next in line with ‘at risk’ groups due to be vaccinated first.
Currently there are 378 active Covid Cases in Jersey, 123 are Asymptomatic leaving 255 with symptoms. There are 10 people in hospital although the majority were already in hospital for other reasons before testing positive. All visiting of hospital patients has been suspended and the last resort ‘Nightingale Wing’ has been placed on standby for use if required.
As usual, we look at all the main stories below. A reminder that the stock market figures quoted were correct at close of business in the relevant market on Wednesday evening, and the commentary was written on Thursday morning, so that the update could be with you on Friday.
The Latest News
‘A shot in the arm’ for Britain was the headline in many of Thursday’s papers, hailing the approval of the Pfizer-BioNTech vaccine. That was all rather tame for the Daily Star, which proclaimed ‘Jabba Dabba Doo!’
‘Now we can reclaim our lives,’ said the Prime Minister, promising that 2.5m people will receive the vaccine by the end of the month.
Meanwhile the second national lockdown has ended and, following a vote in the Commons, the UK is now back in three tiers of varying severity. Not that this stopped people rushing to the shops: ‘Covid fatigue and Christmas lures eager shoppers’ said the BBC headline.
Is it too late? We have mentioned Arcadia and Debenhams above – as we write on Thursday morning there is also news that Bonmarché – with 225 stores around the country – has collapsed into administration.
Figures released by Nationwide showed that UK house prices grew at an annual rate of 6.5% in November, the fastest rate since January 2015. The average house price in the UK is now £229,721 – up from the £227,826 recorded in the previous month.
Meanwhile the UK’s most predictable soap opera rumbled on. With less than a month to go to the end of the transition period, the UK labelled the EU’s latest offer on fishing rights ‘derisory’ as Michel Barnier reportedly told EU ambassadors he had offered a 15% to 18% reduction in the bloc’s fishing rights in British waters.
Away from the UK, we saw the signing of the Regional Comprehensive Economic Pact in the Far East, which created the world’s largest trading bloc. A few days after the signing Chinese leader Xi Jinping said he would open up China’s ‘super-sized’ market to more ‘high quality imports.’
Maybe Xi doesn’t like Shiraz. This week China slapped import duties of up to 200% on Australian wine as trade tensions between the two countries continued to simmer.
It is more than two years since Australia banned Chinese smartphone maker Huawei from its 5G network, and this week the UK brought forward the date on which Huawei will be excluded from our 5G infrastructure. There were dark mutterings about China attempting to influence members of the incoming Biden administration in the US. Expect more of the same as we move towards Joe Biden’s inauguration.
The Stock Markets
The calm before the storm? World stock markets now give every impression of being the calm after the storm. The Hong Kong market drifted down 1% to close on Wednesday at 26,533 but all the other markets we report on in the update were either up slightly or peacefully becalmed.
Two other markets in the Far East led the way, with the markets in China and South Korea posting gains of 3%. China’s Shanghai Composite index rose to 3,449 while the South Korean market ended the week at 2,676.
At home the FTSE-100 index rose 1% to 6,463 while the pound was unchanged against the dollar, ending Wednesday evening trading at $1.3352. Both the major European markets were unchanged in percentage terms, with the German DAX index closing at 13,313 and the French stock market at 5,583.
In the US the Dow Jones index was also unchanged in percentage terms, ending the week just short of the 30,000 barrier at 29,884. The more broadly-based S&P 500 index was up 1% at 3,669.
Our Thoughts
As we have commented above, it has been another relatively quiet week on the world’s stock markets. The prospect of an effective vaccine has played its part in that, as has the likelihood of more predictable policies and initiatives coming out of the White House after January. As we have said many times to our clients, the one thing stock markets dislike is uncertainty: the last few weeks have finally seen us start to move in the opposite direction.
…But there is little doubt that Covid-19 will leave deep and lasting scars. Some aspects of life, especially the appearance of our high streets, will be irreversibly changed. You suspect that small market towns with strong local shops will be fine. City centres are likely to recover. It is the medium sized town that had a Debenhams, a Top Shop, a Dorothy Perkins, that will suddenly see significant amounts of ‘dead frontage’ – and frontage that may never be brought back to life.
Away from the high street, though, businesses are optimistic. A survey published in City AM this week said that the vast majority (94%) of mid-sized businesses in the UK believe they will fully recover from the effect of Covid-19 within a year if a vaccine is made available.
A mid-tier business is classed as one with a turnover between £10m and £300m, and the good news was that the optimism was evenly distributed across economic sectors, with more than two-thirds of businesses in the beleaguered hospitality sector predicting recovery ‘within six months.’ Over half the businesses (53%) felt more optimistic about the UK economic recovery compared to three months ago.
As we have stated previously, we share that optimism. There’s a real determination among businesses to bounce back, and to bounce back quickly. There will – inevitably – be some more bumps in the road, but the approval of the Pfizer vaccination has brought some real hope, for both people and businesses. (And, quite possibly, for the Government’s approval ratings…)
Was there any lighter news this week? Most definitely – and we must salute Australian teenager Jessica Collins. Jess grew up on a mango farm in Queensland and – frustrated by how many mangoes go to waste – turned 1,400 unwanted fruits into a dress for a school project.
It’s a simple process. All you need to do is cut the flesh off 1,400 mangoes, and then clean them with a pressure washer to get rid of bugs and insects. You then need to let the skins dry out (possibly not quite as easy in a soggy UK as it is in Queensland…) and then, as Jess says, “you just sew them on.” It took Jess “between three and four months” to complete the dress – so it’s probably best to make a start now…