Welcome to the new tax year; never have I seen the world more chaotic than it appears at this moment, almost all of the developed world remains in a state of lock down and now our own Prime Minister has been placed in intensive care.
Clearly this virus does not discriminate, it has no political affiliations and is no respecter of the rich and powerful. I suspect none of us will be unaffected by the implications of this pandemic for years to come and on so many levels.
Hearing the news of Boris Johnson’s state of health I went to bed assuming the worst for the UK stock market this morning, and yet, as I write the FTSE100 continues its slow rise from the depths of a 35% loss in 4 weeks on 21st March and is now 10% higher.
Like the pandemic, markets have no opinion on human tragedy, they are driven by an interpretation of numbers indicating which direction the global economy is headed, the latest news is that the numbers of new deaths in Europe is falling indicating that, as expected, we are starting to see a ‘flattening of the curve’.
In the absence of news to contradict this interpretation global stock markets continue to rally; in this febrile atmosphere it would take very little to derail this fragile recovery but for now we can only welcome signs that normality will return. Eventually.
Numerous threats remain, the lack of preparedness in the US may have implications for the world’s largest economy as they are some weeks behind the Europeans and have a significantly less equitable healthcare system.
Systemic threats also remain within Europe and the Eurozone specifically as Italian government debt accelerates towards 150% of GDP placing irreconcilable political pressures on the single currency.
There also remain longer term geopolitical issues to resolve surrounding questions of global supply chains that have become increasing dependent on China.
These are problems for tomorrow, for now the immediate question is how long will this lockdown last, which companies will fail, and which ones will thrive in the post pandemic world?
These are the questions that drive global stock markets and will influence the future of your investments, our role as your adviser is to make sure you are able to participate as fully as your tolerance for risk will permit and to do our best to pick those fund managers best placed to deliver the returns you expect.
The present situation is no fun for any of us but rest assured despite the lockdown we remain committed to following developments across all asset classes and vigilant to keep you informed of the implications for you of this fast moving news agenda.
Please look after yourselves and have the best Easter that you can, Matthew.
Matthew Pescott Frost