The weekend press in the U.K. was dominated by reports detailing Dominic Cummings’ failure to follow the spirit of lockdown measures. Boris Johnson is standing by his chief aide. There is, however, palpable anger both within and without the conservative party that Mr Cummings’ actions have undermined the public’s confidence in government, and that perhaps the Prime Minister’s inaction continues to do so. This story looks set to rumble on, six opposition leaders have asked Boris Johnson to remove Mr Cummings from his post to restore trust in public health advice. It is proving to be an unwelcome distraction at a time when important messages regarding the easing of the lockdown need to be communicated to the public.
Meanwhile, pro-democracy protests in Hong Kong continued throughout the weekend and U.S.-China tensions escalated further as Foreign Minister Wang Yi said the U.S. should give up its 'wishful thinking' of changing China, warning that America is pushing relations to a 'new Cold War'.
Despite the political turmoil, financial markets started the week on a positive note, with a focus on the continued reduction of global lockdown measures. U.S. president Donald Trump has stated that he will not close the U.S. economy down again in the event of a second coronavirus wave, even though this is decided at state level. Dr Anthony Fauci, a leading member of the White House Coronavirus task force, appeared optimistic regarding progress made by U.S. company Moderna Inc, who are working on a potential Coronavirus vaccine. Their vaccine is set to be the first to enter large-scale testing in July this year.
There are grounds for cautious optimism that markets will not return to the irrational panic experienced in February and March. Those European countries who started lockdown easing earliest, up to six weeks ago, do not appear to be experiencing an increased spread of the virus. There remains, however, no room for complacency. Progress in financial markets is reliant on policy makers continuing to do ‘whatever it takes’ to prevent a financial crisis. It is also important that a targeted approach in testing and tracing the virus can be achieved, and an ability to adapt to the so called ‘new normal’ which would allow economic activity to continue its gradual increase.
We continue to carefully monitor portfolios, acting to mitigate risk and where we see opportunity.
If you have any questions regarding your portfolio, please do not hesitate to contact us.