15 October 2020

Winners and Losers

There is a lot going on at the moment.


While the benchmark Footsie index managed a modest recovery as the final quarter of this difficult year got under way, holding above 6000 is proving difficult right now. With tighter restrictions being brought in to cope with the spread of Covid-19, this is hardly a surprise. Certainly, the hospitality sector continues to be under threat, with the new three tier regulatory system adding to its woes.

In America, President Trump is back on the campaign trail after what must be one of the briefest infection experiences on record. The betting continues to favour a Biden victory, but the arcane nature of the election process makes predicting the outcome particularly difficult. Whatever your views of the current incumbent of the White House, a Trump victory is likely to be better for markets. Whether it will make any difference to trade negotiations is anybody’s guess.

Here at home there is little in the way of corporate news emerging at present, though a number of companies have been issuing trading statements. Amongst these are Barratt Developments, which provides an insight into how housebuilders are coping with the current crisis, and Just Eat, while online retailer Asos also published full year results. Barratt was pretty upbeat and arguably the other two are proving beneficiaries of the pandemic.

Economic news is also thin on the ground, though the International Monetary Fund has published revised estimates for the global economy. While they are predicting a better outcome for the current year than they previously thought, next year’s recovery is likely to be slower than they expected. Our own economic performance is forecast to be the second worst in the G7 nations, with only Italy delivering a less good result. China, on the other hand, looks to be back on a growth tack.

Notwithstanding this, the pandemic and the US elections are likely to continue to dominate investor sentiment.  On the pandemic front, what has been interesting about the events of the past eight or so months is the speed at which companies and individuals have adapted to the new normal. As yet it is impossible to see quite when this rather strange period will come to an end. Indeed, some aspects of life may never return to how they were before, but there have been winners as well as losers in the shake up that has taken place. We should all take encouragement from that.

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