2 July - update from our investment partner

  • 2nd July 2020

Read today's global market update from one of our investment partners

What has happened

Equity markets had a mixed session yesterday but ultimately ended in positive territory after weighing constructive vaccine news with a further increase in US cases.

Further vaccine positivity

Pfizer announced that their vaccine had “significantly elevated” the level of antibodies in patients. Whilst idiosyncratic successes are of course welcomed by the market, it is signs of success in multiple trials that is reinforcing the view that this is a virus that can be immunised against. With new case growth clearly still increasing in the United States, as well as other parts of the world, the only real solution to the economy vs health trade-off is a vaccine so this remains critical to sentiment.

Arizona hits a record daily high

It was of course new case growth that tarnished this sense of jubilance however, with Arizona reporting its highest daily increase in cases. The daily growth rate also edged above its recent average with a 6.2% increase although there have been some reporting issues in Arizona recently which make the day-by-day data trickier to read in to. There was also a pickup in fatalities to a new high of 80, albeit this is still below the levels that would have been implied from the initial wave of the virus. It is this latter point that allows markets to retain their overall sense of constructiveness.

What does Brooks Macdonald think

Whilst there are encouraging signs that we edge closer to a vaccine, the US case numbers continue to worsen. We have the release of the US employment report today, a day earlier than normal due to the US observing the Independence Day holiday on Friday. If the US case figures continue to deteriorate there is a risk that July will see a tightening of restrictions and an accompanying worsening of the US employment situation. Any ‘beat’ versus expectations this afternoon may therefore be looked through but any slowing of the improvement pounced on by a more cautious market.

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