Client Weekly Update – Friday 25 March

Covid update

 The final lifting of Covid restrictions – whereby even those who test positive no longer need to isolate – has been delayed by a month until the end of April amid concerns that there could be as many as 5,000 cases in the island. Jersey was due to remove all Covid-related restrictions at the end of March but following advice from senior health officials, ministers have agreed to the delay. There are currently 2,332 known cases with 8 islanders in hospital.

Both the UK and Guernsey have seen a sharp rise in cases since lifting restrictions with Guernsey this week bringing back mask-wearing in schools to tackle the surge of transmissions. On 28 January, Ministers agreed to remove the legal isolation requirement by the end of March 2022 for Islanders who had tested positive for COVID-19.

However, a combination of the identification of the more transmissible BA.2 sub-variant of Omicron, as well as Jersey’s phased de-escalation from COVID-19, means infection rates and hospitalisations have increased since the earlier decision was taken by Ministers. The Government’s strategy to de-escalate remains, however, the unforeseen variant requires an adjustment to the planned rate of de-escalation to ensure that we remain in control of events.

Deputy Medical Officer of Health Dr Ivan Muscat, said:  “We are seeing the increase of infection rates due to the new more transmissible BA.2 variant coinciding with our measured de-escalation. This unforeseen highly transmissible variant – which is now the predominant strain in both Jersey, the UK and many other jurisdictions – is not more virulent but does require a modification to the planned rate of de-escalation to ensure that we remain in control of events.

We must ensure we do not have a spike in severe disease which could cause not only more admissions but also a significant attrition of our workforce – both within health care settings and outside.       

‘The decision to extend the mandatory isolation requirement will allow our spring booster component of the Vaccination Programme to make significant inroads towards completion of vaccinating those who are most at risk of being very unwell with Covid.

This extra month will also better permit those who have not yet completed their vaccination schedule to do so  ‘Although reducing risk through vaccination is the mainstay of our battle against Covid, the extra month will also allow for the further maturation of our anti-viral programme for at-risk Islanders. This too will have a beneficial impact on severe infection and hospital admissions.’

Ministers are reminding all Islanders that we are not living in a post-COVID state; we are adapting to life post-emergency. This means COVID-19 still poses a threat to our way of life, so it is vital that Islanders continue to follow public health guidance, especially keeping up to date with their vaccination schedule, to ensure progress continues to be made.

The extension of the mandatory isolation requirement will allow Ministers to monitor infection rates over the coming weeks. It will also allow for Jersey’s Vaccination Programme to roll out the Spring Booster vaccines to Islanders who are most at risk of complications from COVID-19. The isolation benefit will continue for Islanders who are not able to work due to the requirement to isolate at home.

Ministers will continue to monitor public health intelligence and will review the position before this time.

Ukraine conflict effect on markets

This year, the market started with concerns about rising inflation and interest rates, which was followed by a results season that saw big moves on individual stocks in both directions. That said, the quarter was generally supportive of markets. Soon after, the Russian invasion of Ukraine began, triggering a humanitarian crisis for millions fleeing the fighting. Our thoughts and deepest sympathies remain with all the innocent lives caught up in the continued conflict.

Russian and Ukrainian foreign ministers have met, but so far progress has been lacking substance. With talks continuing, Ukraine has said that it is prepared to accept a compromise, and not join NATO. Whilst the fighting continues there are signs that Russia may be prepared to shift its stance. The West has imposed punitive sanctions on Russia in the hope that the damage to the Russian economy will ultimately lead to a diplomatic solution.

With Russian oil and gas exports having been sanctioned, the price of a barrel of Brent crude oil at one point exceeded $1301. It has since declined following suggestions of increased production elsewhere and a possible diplomatic solution. In addition, the price of nickel soared due to its supplies from Russia having been reduced. A major Chinese player in the nickel market reportedly missed a huge margin call, which caused the price to rise on the London Metal Exchange before trading was halted.

Grain prices, such as wheat, have also risen as fears grow over this year’s harvest in Ukraine. Ukraine and Russia are major exporters of fertilisers used by growers globally; if supplies are cut, it may reduce crop production elsewhere. Inflation was already high, with US consumer prices up nearly 8% last year. Food and heating are essential spending and rising costs may constrain consumer spending on other products, which may act as a drag on economic growth.

With inflation still far above central banks’ 2% target and likely to extend for longer than previously expected, the threat to growth from tightening policy now has caused a headache for central banks. The dilemma is, to what degree to cut back the support put in place during the pandemic and how quickly to raise interest rates to counter inflation or hold off to support the economy.

It seems that, for now, central banks are tentatively going ahead with their predetermined plans. The Federal Reserve (Fed) and Bank of England (BoE) at their last meeting went ahead with their expected 25 basis point rate rises. For the Fed, this marks the first rate increase since 2018; for the BoE, this was the third consecutive increase. The European Central Bank (ECB) struck a hawkish tone bringing forward the date they expect to end their bond-buying programme.

This comes despite Europe’s reliance on Russian energy and the damage to supplies caused by the war on their doorstep. With central banks showing little let-up in their tightening plans, this added some pressure to financial conditions which have become less accommodative in the face of the situation in Ukraine. The news emanating from Ukraine and central banks will continue to dominate, and markets will likely remain volatile as a consequence.

Volatility remains elevated given the rapidly evolving situation. We do not know how long this conflict will go on and as a result, it is hard to measure the economic impact of the war and the sanctions on the global economy.

We continue to closely monitor the conflict.

Mixed markets

London’s blue-chip fallers this morning are led by Airtel Africa PLC (LSE: AAF), down more than 8% after a major shareholder sold a chunk of shares at a big discount to yesterday’s close.

European markets are mixed today. The DAX is up 0.93% while the FTSE 100 gains 0.35%. The CAC 40 is off 0.76%.

U.S. stock futures rose Friday morning as the S&P 500 looked to close out its second consecutive positive week.

Futures tied to the Dow Jones Industrial Average gained about 85 points, or 0.3%. S&P 500 futures added 0.3%, while Nasdaq 100 futures ticked up 0.5%.

Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.14%, while the Hang Seng led the Shanghai Composite lower. They fell 2.47% and 1.17% respectively.

P&O Ferries drama

Peter Hebblethwaite, the CEO of P&O Ferries, is under increasing pressure to resign as a result of the no-notice sackings of 800 employees.

After his “brazen” and “breathtaking” law breach, Transport Secretary Grant Shapps urged for him to go.

Mr Hebblethwaite conceded to MPs that he infringed the law by not consulting workers, but claimed if he had to do it again, he would make the same decision.

Mr Hebblethwaite has also been asked to resign by the head of the transport committee.

“It’s untenable to come to parliament and say you choose to break the law and you have no regrets,” Conservative Huw Merriman said on Thursday.

The Rail, Maritime and Transport union (RMT) announced on Thursday that Peter Hebblethwaite should be removed as a director immediately.

Dr Roger Barker, director of policy and governance, said: “By suggesting that they knowingly broke the law in the actions that they took, [Mr Hebblethwaite] leaves himself and the rest of the board vulnerable to court proceedings for unfit conduct and the potential for disqualification as a director, not just of P&O but any UK company.”

Mick Lynch, the union’s general secretary, said the union would meet with P&O on Friday to urge the reinstatement of dismissed seafarers.

Electric car charge-points overtake fuel pumps

According to government forecasts, the number of electric vehicle charging sites will reach 300,000 by 2030, but motorist organisations argue the pace is too slow.

Operators must ensure that drivers can compare pricing and pay with a contactless card under the guidelines.

The RAC, on the other hand, noted that while the charge-point objective “sounds spectacular,” it is concerned that the number will “not be sufficient” to meet growing demand.

There are presently 30,000 public electric vehicle charging stations in the United Kingdom.

According to the Department for Transport (DfT), the number of charge-points on UK roads by the end of the decade would be nearly five times that of today’s petrol pumps.

The monies were previously revealed as part of the government’s £1.6 billion Electric Vehicle Infrastructure Strategy, but the government has now provided more information on how they would be used.

Operators will be required to give real-time data for users to monitor the status of charge-points and apps for customers to discover the nearest available one under new regulations and legislation.

They must also have a 99% reliability rate at rapid charging stations.

Prime Minister Boris Johnson said: “We’re powering ahead with plans to help British people go electric, with our expanding charging network making journeys easier right across the country.”