Weekly Market Insight

Latest Economic & Market Update 25th May 2020

25th May 2020

Good afternoon, it is 25th May 2020 and here is your economic and market update from BlackBee.

Today we are going to focus on:

  • Trading on Friday show investor fears of new tension between US and China.
  • The volume of retail sales in the UK shows significant contraction for April, dwarfing previous contractions.
  • The European Central Bank “stand ready” to expand bond-buying programme.

On the back of news that China is preparing to impose national security laws on Hong Kong, stocks fluctuated and investors moved towards safe havens such as gold and US Treasuries in Friday’s trading. Last year mass protests occurred due to a proposed bill that would mean residents of Hong Kong could be trialled for certain crimes in China. Hong Kong has been a topic of tension between the US and China, and tensions could grow even more as a bill was introduced in the US Senate to impose sanctions on Chinese Communist Party Officials and banks that conduct business with any entity that enforces the new law.
 
Retail sales figures released on Friday showed the largest month on month contraction in retail sales for the UK since the record began in 1996. The volume in retail sales contracted by -18.1%. Previously, the largest contraction measured -5.2% which was set in March. In contrast, online sales rose 18% month on month in April. Prior to the crisis, the survival of retail stores was already in doubt due to the movement towards online shopping. The drop in activity now adds further pressure to retail stores as many businesses may not be able to survive the drop in sales.
 
At the last ECB monetary policy meeting, officials agreed that they would “stand ready” to expand its bond-buying programme. The current pandemic stimulus programme stands at €750 billion and investors are now anticipating an expansion in the next June meeting to address the financial turmoil from the crisis. Current spending has so far been seen to curtail significant rises in borrowing costs for the harder hit southern countries. Concerns over deflation were raised at the meeting as the Eurozone economy is heading for its worst recession since World War II.

Best & Worst Performers of Large Cap Stocks on Friday
Click the image to enlarge

Global Market Update
(as at close of markets 22/05/2020)