Additionally, we had some positive test results from the potential new drug, Remdesivir. Data from a study covering 1,063 patients of different sexes, ages, and ethnic groups showed that the antiviral medication does reduce mortality and the length of sickness.
However, this doesn’t mean we aren’t concerned: the return to ‘normal’ is likely to be bumpy and taking two steps forward and one step back is unfortunately something we are now going to have to live with over the coming weeks and months.
Consequently, as we have previously explained, we like to invest with your long-term interests in mind by focusing on risk management and capital preservation, as we believe that this is just as important as investment performance and returns. Although the path of least resistance for equity markets is currently up, we aren’t oblivious to the current economic and political risks and as such, we are maintaining a defensive stance by holding a slightly higher than normal level of cash (including liquidity funds).
The main economic data release during the week was yesterday’s (Thursday 9 July 2020) weekly US jobless claims, which showed both the initial and continuing claims continued to decline (which is positive news).
We have a much busier week ahead: both the ECB and Bank of Canada have monetary policy meetings. Other highlights include: UK CPI inflation, GDP for May and employment data (unemployment rate and weekly earnings); US CPI inflation, retail sales, industrial production, the Fed’s Beige Book, and the University of Michigan Consumer Sentiment; Eurozone industrial production; and Chinese retail sales and industrial production.
However, the data releases that are most likely to impact equity market direction next week are the US Empire State Manufacturing Survey (on Wednesday 15 July 2020), followed by the Chinese Q2 GDP and the US weekly jobless data (both on Thursday 16 July 2020).
Investment Management Team