Articles

The equity market recovery stalled in July in the face of deteriorating news on the number of new Covid-19 cases, notably in the sunbelt states of the United States. This was exacerbated by renewed, but localised, outbreaks in parts of Europe. Thus, although the initial rebound in economic activity from April’s trough has been very sharp, even “V”-shaped, concerns of a more protracted full recovery are in the ascendant once again.

A key factor will be employment levels. Although furlough measures have contained the rise in official unemployment rates in much of Europe, several high-profile companies have announced permanent job cuts, and more are expected to follow. Countering the threat are fiscal stimulus packages and continued central bank support. On this front, the European Union’s creeping progress towards the implementation of a €750bn stimulus package is a positive development, while the US Congress continues to argue about the scope and scale of its own latest stimulus. Even so, both are expected to proceed given the current imperative to support economic growth.

In this commentary John Wyn-Evans, Investec Wealth & Investment’s Head of Investment Strategy, reflects on July’s market performance with his latest monthly observations.

Read full article here.