Second Wave ‘Under Control’
Welcome to another blog update of the Weekly Overview Series.
In this week…,
- United States Covid-19 daily cases topped 60,000 for the first time. However, the steepness of the second wave virus curve in the U.S is plateauing. The most affected states are Texas, California, Florida and Arizona. Meanwhile, in the EU and the UK, daily new cases rate remains flat. Australia is working to contain its virus spread, as new cases rate increases at a dangerous pace at the moment.
- Fewer Americans filed for unemployment benefits than expected. The number came at 1.31 million in the week ended July 4th, below market expectations of 1.38 million and down from 1.41 million in the prior week. Still, the largest employer among U.S banks, Wells Fargo, is planning to cut thousands of jobs starting this year, which could reverse the current trendline in jobless claims.
- The Chinese government, through the government-owned pension funds, acted to cool the recent euphoria in the Chinese equity markets. Those funds announced plans to sell holdings of stocks that soared this week. Regulators are willing to avoid the 2015 bubble that ended in a $5 trillion crash. The PICC (People’s Insurance Company of China) dropped 7.4% after the announcement.
- U.K Chancellor Rishi Sunak announced on Tuesday a 30 billion pounds plan to save the U.K economy. The measures included:
- Raising the stamp duty threshold for purchases of property to 500,000 pounds until March 31st 2021.
- A six-month sales tax cut for restaurants and hotels to 5% from 20%.
- A 1,000-pound cheque to employers for every worker they retain.
- A 50% discount on meals, as part of the “Eat Out to Help Out” plan at participating restaurants between Mondays and Wednesday in August.
- Inevitable disruptions will occur as of 1st January 2021 between the U.K and the E.U and risk compounding the pressure that businesses are already under due to the Covid-19 outbreak” said the European Commission. Regardless of the outcome of talks, there will be barriers to trade in goods and services at the end of the transition period as the U.K will not participate in EU policies. Michel Barnier, Chief EU negotiator, said this week’s discussions confirm there are significant divergences between the two parties.
I leave here the S&P500 1-week heat map performance and a link to the FT Coronavirus Tracker.
Have a good weekend.