It’s another Friday and that can only mean one thing: Another edition of News, Views and Truths.
The biggest news of this week was announced this morning; the UK economy expanded by 6.6% in July, its third consecutive monthly increase, according to the Office for National Statistics (ONS). This equates to an output recovery of just over half of that lost as a result of the continued global pandemic.
“Education grew strongly as some children returned to school, while pubs, campsites and hairdressers all saw notable improvements. Car sales exceeded pre-crisis levels for the first time with showrooms having a particularly busy time,” said ONS Director of Economic Statistics, Darren Morgan.
The 6.6% rise in gross domestic product, which was just a tenth of a point below economists’ consensus, follows monthly gains of 8.7% in June and 2.4% in May, and a record fall of 20% in April.
This rebound process should see a further increase in August, with many economists predicting something in the region of 3% and a subsequent bounce in September to reflect the reopening of schools and colleges. In total, it is expected that the third quarter will register at around 17% growth.
However, this would still leave the size of the UK economy at about 8% lower than it was before the virus hit, and all eyes will be on the Chancellor when he delivers the Autumn Budget. The date for this has not yet been announced and although the expectation is for this to take place in November, in previous years it has been as late as December.
So, what has this meant for the market? As at the time of writing, the FTSE 100 is up 0.27% at 6019.60, with Burberry leading the index- up 2.71% on the back of a weak Sterling, in opposition to financials which continue to look like a pretty bad investment.
And that has been the theme of 2020, as regular readers of this publication will know. Despite the sharpest correction is Nasdaq history over the past week, with the index falling more than 10% in three days, led by tech stocks, these companies are rebounding well, with investors viewing this as a short-term incident and now classically “buying the dip”.
Once again, it is not as simple as where you invest, but what you invest in. On that note, this tweet below sums up 2020 markets in a nutshell perfectly:
Tech stocks, high-quality growth stocks, had a very sharp move south in the past few days. But that is nothing compared to those investors who are backing the value “horse”. In the words of Peter Lynch, “Know what you own, and know why you own it.”
If you haven’t signed up for our next webinar on the 23rd September, which focuses on the problems with holding Cash ISAs, WHY ON EARTH NOT? Seriously, it’s a good and valuable way to spend 30 minutes or so and if you do have cash ISAs (or any sort of cash savings that are not earmarked for medium-term plans), you need to sign up HERE.
This week’s “When Andrew Met…” video is on the website with David Walton, manager of the Marlborough European Multi-Cap fund. A very topical discussion of European equities, bearing in mind the current back-and-forth between the EU and the UK. David outlines what has been driving his fund’s success during the pandemic.
Once again, my weekly podcast is also live here, with this week’s guest being Rahul Bhushan of Rize ETF, who outlines the investment opportunities within Medical Grade Cannabis. Yes, you read that correctly. Where else could you possibly hear about such opportunities?
That is it for another week. Stay safe, stay grounded and I shall see you all next week.
Why not join us for our ‘Perils of Cash ISAs’ Webinar?
Join Three Counties’ own Andrew Alexander and Corryn Wild for our exclusive The Perils of Cash ISAs webinar, coming September 23rd, focusing on the concerns surrounding cash savings and, in particular, Cash ISAs. Until recently, we were simply surmising on the forward path; but now we know and now we can prepare.
Sign up for now via this link, or learn more about what you can expect from our webinar here.