Monthly Market Pulse: July 2020

Following the unprecedented downturn comes the recovery. In the euro zone, according to the latest set of data, including June PMI data, the historic economic downturn eased again in June as swathes of businesses reopened after the lockdown. In the UK, the latest data also shows that the downturn in business activity eased sharply in June. The Bank of England also said it expected the UK to be on track for a V-shaped recovery. In our chart of the month, we show the IMF’s forecast for the world GDP through to 2021. The organisation expects a V-shaped recovery starting in Q3 2020 and a return to pre-crisis levels in emerging markets and developing economies as soon as Q3 2020, but not in advanced economies.

Chart of the month: Quarterly World GDP

(2019: Q1 = 100; dashed lines indicated estimates from January 2020 WEO Update)

Picture 1

Politics

  • The UK announced the ban on mobile providers from buying new Huawei 5G equipment after 31 December. They must also remove all Huawei 5G kit from their networks by 2027.
  • The war of words between the US and China escalated as Donald Trump signed an executive order ending Hong Kong’s privileged trading status with the US.
  • The Trump administration gave formal notice to the World Health Organisation that the US will withdraw from the body in July 2021.

Business & Economics

  • The UK announced more measures to help the pandemic-hit economy. From a £1,000 cash bonus to companies that bring back furlough workers from November, to cut in stamp duty and £10 per head subsidies on diners during August.
  • Prime Minister Boris Johnson announced a £5bn New Deal post-Covid spending spree to revive UK economy with a message to ‘build, build, build‘.
  • According to the latest IHS Markit COVID-19 recovery survey undertaken in June and published on 16 July, US and Chinese companies are expecting to lead the fastest economic recoveries from COVID-19. Furthermore, of those companies still waiting to recover their pre-pandemic output, 13% globally expect to have regained their prior peaks within three months, with a further 17% within six months, meaning over a quarter of all firms expect to regain lost output by the end of 2020.

Real Estate

  • The Nationwide House Price Index shows that UK annual house price growth ground to a halt in June. Prices were down by 0.1% YoY, the first decline since 2012.
  • Looking at monthly trends, prices were down by 1.4% MoM, the second consecutive month of decline. But at 1.4% June’s decline was less steep than May’s 1.7% drop.
  • Before the pandemic struck, the UK was witnessing a very strong property market. Housing starts by Homes England were the highest on record before covid-19 struck.

Equity Markets

  • In the US, investors continue to worry about too much optimism in the stock markets as the S&P 500 index was up 3% year to mid-July, having recovered from a decline of more than 20% in mid-March.
  • In China, stock markets had jumped by 16% by mid-July and were up by 40% from their low in March, raising concerns of an imminent correction.

FX & Commodities

  • Gold has moved in a range around $1,800 as rising cases of COVID-19 across the US have undermined the economic recovery, while US- China tensions have escalated.

At Blend Network, we funded a record amount of loans in June 2020: £1,690,000. A total of 214 investors lent across 3 loans: a 10% return p.a. loan, a 9% return p.a. loan and an 8% return p.a. Our pipeline of loans is the strongest it has ever been, so if you missed a loan, keep an eye on our upcoming new deals and make sure you don’t miss the chance to lend from a minimum of £1,000.

 

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