Coronavirus Update, 17th April 2020
They say in every crisis there will be heroes, and this week, we take a moment to celebrate those.
If there is anything that Captain Tom Moore has taught us, it is that it is more than possible to defy all the odds. As it stands currently, the Second World War veteran who set out to walk 100 laps of his garden before his 100th birthday has not only finished ahead of time but has raised over £18 million for the NHS and has said he will continue all the while the donations keep coming in. This is a feat of truly herculean proportion and Holden & Partners would like to congratulate and thank him for his heroic effort, as well as all the amazing keyworkers who are also true heroes.
It has been a week of mixed news, after we all made the best of a long Easter weekend in lockdown, amidst continued pleas for the British public to remain at home.
On the bright side, we saw Boris Johnson leave hospital following a three-night stay in intensive care. Although he is still recuperating at Chequers and has not resumed his full-time duties, his road to recovery has at least provided some good news1.
We also saw lockdown restrictions eased across Spain, one of the worst-hit countries in Europe, following a slow down in the number of fatalities caused by the illness. These first tentative steps and the resulting trajectory of COVID-19 will be watched by neighbouring nations to see if there is any resurgence in the death rate following these minor policy changes2.
The UK, however, shows no signs of changing the severity of the lockdown restrictions that are currently in force. Lasts night’s government briefing provided the news that everybody was expecting, with Dominic Raab announcing that we would be spending at least another three weeks in lockdown to continue slowing the spread of the virus3. We suspect, although we do not know for sure, that this will not be the last extension and when the time comes to be ‘freed’ into the world it will be slow, measured and potentially follow a form of segregated approach whereby some groups of people or certain parts of the country will be let out first. How this is organised and policed is currently anyone’s guess. The concern amongst governments and scientists globally is that a second wave is a very real potential and not to be taken lightly4, whilst others report that we may need some form of social distancing up until 20225.
The news from the USA was somewhat different, where Trump unveiled a strategy entitled “Guidelines for Opening Up America Again”. Rather than the nation-wide lockdowns seen across Europe, this roadmap allows different states to implement different restrictions depending on certain criteria6. The results of this rather more flexible approach remain to be seen.
We have also seen the official death toll in Wuhan, the Chinese province where the pandemic began, revised upwards by 50%. This alarming alteration to the figures coming out of China have seen renewed criticism of the state’s handling of the outbreak. However, China have denied that this revision is in anyway a cover up7.
Returning to economics and the picture is becoming clearer and clearer across the globe. With vast swathes of the world on lockdown, economic activity has, as expect dropped off a cliff. Consumer confidence (a measure of consumers’ feelings about current and future economic conditions) has fallen to 2008 levels since the lockdown in the UK8, whilst Australia has seen consumer sentiment dropping the most in 47 years9. Chinese Gross Domestic Product (GDP) was worse than expected, with the economy shrinking for the first time in 40 years10, with the first quarter (Q1) GDP figures plummeting 6.8%.
You would think with all this bad news that global stock markets would be reacting in the very opposite way of how they are now. It is no secret that we are living in crazy, bizarre times and expected norms are being turned on their head. We believe the markets, in essence, have written off the second quarter of the year. However we suspect and hope that the recovery will likely be quick and the markets are now looking forward to what happens in Q3.
Q2 provides many businesses with the opportunity to wrap up as much bad news into one with many ‘kitchen sinking’11 as much as they possibly can. This will create many sensationalist headlines, however it is to be expected and we will continue to monitor how businesses, markets and data perform over the coming days and weeks, maintaining our advice to stay calm and avoid dramatic decisions.
This is likely to be one of the worst economic shocks in living history. However, as humans through history have, and will continue, to prove, like Captain Tom, we are an adept species at defying the odds.
1 https://www.telegraph.co.uk/news/2020/04/17/boris-johnson-coronavirus-chequers-news/
6 https://www.bbc.co.uk/news/world-us-canada-52314866
7 https://www.cbsnews.com/live-updates/coronavirus-pandemic-covid-19-latest-news-2020-04-17/#
8 https://www.theguardian.com/business/2020/mar/01/coronavirus-britain-economy-dangerously-exposed
11 https://www.bbc.co.uk/news/magazine-32412594
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