Weekly Market Insight

Latest Economic & Market Update 30th November 2020

30th November 2020

Good afternoon, it is November 30th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Central Bank of Ireland Financial Stability Report highlights much more resilient banking system compared to the previous crisis.
  • Retail Sales in Ireland fall 0.7% in October but most sectors experiencing higher sales volumes compared to pre-pandemic levels.

The Central Bank of Ireland has published its latest Financial Stability Review. In the report, the CBI noted that despite the pressure put on banks’ financial conditions from Covid-19, built up resilience over the past decade has resulted in a banking system that is better able to serve the needs of businesses and households through this period of uncertainty. The improving resilience is based on higher capital levels, funding based on more stable retail deposits and also improved credit quality in domestic loan portfolios. A forward-looking assessment of the financial position of the retail banking system suggests that the system in aggregate has sufficient capital to absorb shocks that are materially worse than baseline projections, noting that while the adverse scenario would be significant, potential losses would still be absorbed. This is a system-wide position which can mask significant dispersion in the potential impact of the shock on individual banks and the CBI highlighted the need for regulated firms to prepare and plan for a variety of eventual outcomes. Risks to domestic financial stability were identified as being the possible outcome of a slower than expected recovery in global demand, a disruptive Brexit, a prolonged impact of Covid-19 including repeated public health restrictions and, most notably, if the financial system were to restrict the supply of credit required to support households and firms. (Source: Central Bank of Ireland).

Figures released by the CSO show that retail sales in Ireland fell by 0.7% in October in comparison to September. On an annual basis, retail volumes were 8.1% higher in October 2020 compared to October 2019. When comparing current figures to those in February 2020 just prior to the crisis, the release showed that retail sales were 10.6% higher. However, it must be noted that this recovery has not been experienced across all sectors. Bars (-75.3%), Fuel (-20.5%), Books, Newspapers & Stationery (-9.9%), Clothing, Footwear & Textiles (-4.1%) and Department Stores (-2.8%) are still below the pre-pandemic levels recorded in February which would be expected, especially for bars and fuel, due to the restrictive measures still in place, but all other sectors now have sales greater than that of February 2020. The proportion of retail sales transacted online from Irish registered companies increased to 6.1% in October up from 4.5% in September which would again be expected due to the restrictive measures in place. At the height of the first lockdown in April 2020, the proportion of retail sales transacted online from Irish registered companies stood at 15.3%. (Source: CSO).

Best & Worst Performers of Large Cap US Stocks on Friday
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Global Market Update
(as at close of markets 27/11/2020)