A rally in industrial and energy stocks at the start of last week excited investors. The Dow Jones closed above 25,000 points for the first time since early March, logging the largest two-day advance in a month. The resurgence of cyclical stocks – which are more economically sensitive than defensive sectors such as healthcare and technology – suggested that the economy may have turned a corner.
On Tuesday, the European Commission proposed a recovery package worth €750 billion. The package, which requires unanimous approval from EU member states, has considerable ramifications. It significantly increases economic integration in the European Union: the money will be taken as common debt, and issued to the regions and industries in the EU that have been hit hardest by the virus, and repaid through EU-wide taxes over the next 30 years. The package signifies a mutualisation of European debt that takes the bloc closer to something like a federal union.
In England from today, children of some year groups will return to school, groups of six can gather outside, and some non-essential businesses will start to reopen.
|S&P 500 Index discrete one-year returns|
|Apr 2019 – Apr 2020||Apr 2018 – Apr 2019||Apr 2017 – Apr 2018||Apr 2016 – Apr 2017||Apr 2015 – Apr 2016|
Source: Financial Express. Data shown in both tables is for the S&P 500 Total Return Index.
Past performance is not a guide to future returns.
In The Picture
In this video, Lauren Smith, Investment Communications Executive, reviews recent events on markets and looks ahead to what’s in store.
The Last Word
“It falls on all of us, regardless of our race or station – including the majority of men and women in law enforcement who take pride in doing their tough job the right way, every day – to work together to create a ‘new normal’ in which the legacy of bigotry and unequal treatment no longer infects our institutions or our hearts.”
Barack Obama on the death of George Floyd.
Ninety One and Somerset Capital Management are fund managers for St. James’s Place.
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