Cases of the Covid-19, otherwise known as the Coronavirus, spiked last week, although we note that this is due to the inclusion of reclassified cases. On a positive note, laboratory confirmed cases were lower, which suggests that the disease is spreading at a slower rate, although the death toll has now exceeded that of SARS. The economic impact of the virus has been mixed thus far, but we believe it will have long-reaching, knock-on effects to the greater Asian region. It is thought that the People’s Bank of China (PBoC) are likely to provide liquidity, to ease funding conditions in Chinese money markets in an effort to tackle downside risk posed by the virus and that further measures to support the economy could follow.
Leading into a long weekend for US citizens, who will be celebrating President’s Day, US economic data remained robust. Labour market indicators, especially workers who are quitting for new jobs and small business optimism, were particularly positive. January retail sales rose inline with expectations of 0.3%, this was mostly driven by online and other non-store sales. Earnings also continue to be strong; of 80% of S&P 500 companies that reported in December 2019, 76% beat earnings expectations, which is inline with the long-term trend, suggesting the economy is in rude health.
In the UK, the ‘Boris Effect’ continues to be felt; Chancellor Sajid Javid resigned from the Cabinet following Boris’ request to sack all of his advisors, a request that Javid felt was a move too far. It has been widely publicised that there have been tensions between Javid, and Boris’s top adviser, Cummings, who wanted more control over economic policy and spending in the last few months. Javid’s departure made way for the appointment of Rishi Sunak who has a tall task ahead; with the Budget due to take place on 11th March, it is questionable if this will go ahead.