Mid-week update: 24 June 2020

The week to Tuesday’s close saw the UK top 100 companies index close 1.2% higher on the week, the Euronext 100 Index 1.7% higher but the US S&P 500 Index just 0.2% higher as strong gains in technology-driven shares were offset by a decline across the wider market.

We’ve spoken before about the importance of the technology enabled giants, a group of stocks that include Facebook, Apple, Amazon, Netflix , Alphabet (the owner of Google) and similar firms and their importance in driving equity indices higher. While the UK is very poorly represented in this group, Covid-19 has put the focus on our better representation in pharmaceuticals including AstraZeneca that have also benefitted from the crisis.

Outside of those two groups the performance of western equity markets is surprisingly similar, with the US S&P400 MidCap Index down 6.3%, the UK UK top 250 index down 8.5% and broader Euronext 100 Index down 7.1%.  In mixed asset portfolios these declines have been offset by large gains in government fixed interest, for example the UK 4 ¼% Treasury 2040 gained 9.8%, and the relative performance of Alternative assets.  All of those returns are before dividends or interest and in local currency.

As the end of the quarter approaches it is worth recognising how much progress has been made from the dark days of late March.  Europe, the UK and US have re-opened or are about to re-open the great majority of their economies for business once again. As we move into June we will start to hear more about how that is working out for individual companies and sectors.  But with the initial hit of the virus now behind us we also expect to start hearing more from governments about how they intend to both stimulate the economy and over the longer term, how they intend to pay for that. With rumours of an emergency budget in the UK during July it is likely that we will start to learn more in the next few weeks.