Market Update – 5th May 2020.

Equity markets opened lower yesterday after Donald Trump reignited tensions with China.

Obviously, the prospect of mixing the negative theme from 2018/19 (the US/China trade war), with that of this year (the coronavirus outbreak), is not a particularly attractive one.  However, while it was headline news (like all negatives), as we said yesterday, at present this appears to simply be bombastic rhetoric from Donald Trump ahead of the Presidential elections in November.

Consequently, while equity markets opened lower, they spent the day slowly grinding higher – and while the FTSE-100 ended the day down just over 9 points, on Wall Street both the Dow Jones and the S&P 500 finished the day in positive territory (up 0.11% and 0.42% respectively).

This morning equity markets have opened sharply higher (as we write the FTSE-100 is up 75 points or 1.3%) after California announced the fewest deaths from the coronavirus outbreak in three weeks, which prompted the Californian Governor, Gavin Newsom, to announce a loosening of the lockdown restrictions and allowing some businesses to reopen later this week.

This is very positive news as not only does California have the largest economy in the US, its economy is actually bigger than that of the UK – and provides us with reassurance that we will see a V-shaped economic recovery.

However, that doesn’t mean that the path for financial markets will be smooth – as we have previously warned, we fully expect market volatility will remain elevated in the short-term.

Investment Management Team