Hello, and welcome to our latest weekly update. This was a week that brought news of further easing of the lockdown, but there were worries about a ‘second spike’ in the US which – as we’ll see below – impacted some of the world’s stock markets.
As always, the stock market figures quoted were correct at the close of business in the relevant market on Wednesday evening. The commentary was written on Thursday and for the first time since we started the weekly update, was not revised after the Government’s evening update. With lockdown being eased, the daily briefings – a feature of our lives since March – have now given way to ‘ad hoc announcements.’
The Latest News
Yesterday the Chief Minister John Le Fondre announced that Lockdown restrictions were to be further eased and Jersey’s safe distancing limit will be reduced to 1 metre effective from today. He commented that this will allow islanders to return to a greater degree of normality after a prolonged period of Lockdown measures. Also first orders were announced as pubs were given the green light to open from Wednesday 1 July and will be able to provide a seated alcohol only service.
In what is being described as “the Safer Travel Period”, today Deputy Chief Minister Lyndon Farnham announced in a press conference at 9am, that Jersey’s borders will reopen from Friday 3 July. People can resume travel to and from Jersey without restrictions or the need for special permission on medical, essential worker or other grounds.
This means that islanders will be able to visit friends and family out of the island and tourists and visitors will be welcome here again. All arriving passengers will either take part in the border testing program or undergo a quarantine period. New testing procedures should provide results within 12 hours and anyone testing positive will be required to stay in Government funded hotel accommodation for a period of Quarantine, however numbers are expected to be very low.
There are currently 5 cases of Covid-19 in Jersey which are expected to reduce to 2 by the end of today with no one requiring treatment in the hospital.
In the UK
The week just ended brought us the usual mixture of good and bad news. In the US, jobless claims were worse than expected as another 1.5m Americans filed for unemployment, and in the UK, it’s estimated that up to 1 in 6 jobs in the car industry could disappear because of the virus.
In Germany, the R rate – the coronavirus reproduction rate – suddenly leapt to 2.88 following an outbreak of the virus at a meat processing plant and Brazil became the second country to officially hit 1m cases of Covid-19.
A little-reported – but worrying – piece of news in the UK came from the Office for National Statistics. Following a £55.2bn borrowing surge in May – roughly nine times the amount the Government borrowed in May last year – the UK’s debt-to-GDP ratio has now passed 100% for the first time in 57 years.
But perhaps there is some light at the end of the tunnel. Retail in the UK is starting to bounce back as shops re-open, and fuel sales for May were up 49% on April, suggesting that more people are commuting and/or travelling further to exercise.
With the two metre social distancing rule consigned to history, pubs and restaurants in England will re-open on 4th July – already dubbed ‘Super Saturday’ by the papers – as the economy gradually starts to recover. Chancellor Rishi Sunak is expected to deliver a fiscal statement in early July, with a temporary reduction in VAT to boost spending one of the widely trailed measures.
The Stock Markets
This was a mixed week for world stock markets. The markets in the Far East inched upwards – China, Hong Kong and South Korea all rose by 1% – while the big winner was the Indian stock market, which rose 4% in the week to 34,869.
Markets in the US and Europe all drifted lower, though. In the UK, the FTSE-100 index finished down 2% at 6,124 and the German DAX index was down by a similar percentage to 12,094. The French stock market fell 3% to 4,871.
Although – as we comment elsewhere – there was plenty of encouraging news this week, the markets were weighed down by fears of a second Coronavirus ‘spike,’ especially in the US. New York and two neighbouring states announced a quarantine on visitors from some US hotspots, as the Dow Jones index fell 3% to 25,446. The more broadly-based S&P 500 index was down 2% to 3,050 with shares in travel, retail and energy firms among the hardest hit.
Back in the UK, the pound fell against the dollar, ending Wednesday 2% down on the week and trading at $1.2424.
Despite the falls in the UK and US stock markets this week, let us continue with the glass half full.
This week brought the news that Toyota has chosen the UK as its export hub for the new hybrid it’s building. The UK continues to be the top country in Europe for financial services investment. The Bank of England re-affirmed its commitment to the economic recovery by pumping £100bn into the economy. And, as we mentioned above, the Chancellor will unveil a financial package next month, specifically designed to kick-start the economy.
Amazon has launched an accelerator programme for UK start-ups and small businesses and in the US, new home sales have rebounded much more quickly than economists expected.
Of course, everything will not go smoothly in the future. We may well see a second spike of the virus in the UK and all of this will – at some point – have to be paid for, with the IMF estimating that the UK will end up borrowing £400bn to tackle the recession caused by the virus.
But it will only be paid for by a successful and growing economy and, as we commented a few weeks ago when we looked right back to the 14th Century, we are sure that the UK economy will ultimately bounce back from the pandemic in even better shape. Perhaps Friedrich Nietzsche’s famous saying: ‘That which does not destroy us makes us stronger,’ applies to economies as much as it does to individuals.
And with that sprinkling of philosophy, let’s look at this week’s lighter news – and another crisis for ‘sun-starved Brits’ to deal with.
Two metre rule or no two metre rule, no Government policy – or advice – can legislate for the sun coming out and people’s desire to flock to the beach. Thursday morning’s pictures on the front pages suggested that ‘one metre plus’ had swiftly and unofficially been abandoned.
But there may be even bigger problems ahead for what the tabloids have dubbed ‘sun-starved Brits.’ While holidays to Spain are seemingly back on the agenda, social distancing on Spanish beaches means there’ll be far fewer sunbeds available. The age-old holiday problem has suddenly got worse…
Perhaps the answer is an app? Maybe we could reserve our sunbeds while we wait at the airport? After all, Wetherspoon’s have an app to allow you to order a round of drinks and a full English breakfast. Why not one for a Spanish sunbed? It would give you an ‘el’ of an advantage and wouldn’t ‘costa’ fortune to develop.
As the old-style comedians used to say, ‘We’re here all week…’