It has been 28 days since Boris Johnson delivered his address announcing that the UK will be placed in a state of lockdown. On Thursday, the Foreign Secretary, Dominic Raab, declared that the lockdown would be extended for at least another 3 weeks. It seems like we have settled into our social distancing routine. We have adapted to our working life and we have discovered new hobbies to replace our commutes.
Our new lifestyle has encouraged greater reading, home-exercise and cooking which could spark a new healthier way of life. We have already experimented with the idea of operating remotely from home and this could result in a more permanent shift. With the much-improved workplace software now available, employers are weighing up their need for office space and we could be approaching the start of a drastic change in the workplace environment.
The UK’s first quarter GDP data is set to be released at the end of April; however, Q2 GDP data is expected to capture the largest proportion of the economic downturn. Markets were largely flat last week except for the S&P 500 which was up 2.76% in Sterling terms. Most notably MSCI China was up 2.28% last week in Sterling terms and its year-to-date return reached 0%.
Last week also marked the start of increased M&A activity with the Competition and Markets Authority provisionally approving Amazon’s investment in Deliveroo who had stated that, without an injection of funds, they would face exit from the market. Deliveroo has been hit hard by the closure of restaurants and hence, would not survive the pandemic. Despite concerns that the investment would reduce the potential for new competition, it was decided that business continuity and availability of food override competition concerns. Predatory buying behaviour from larger companies is expected to continue as they operate larger cash reserves and greater market power.
This period of change may also encourage new market entrants as seen with Zoom’s rapid expansion in the video communications sector. Zoom was trading at $76 in mid-January and is now trading at $150 as of mid-April following their speedy uptake. Unemployment has understandably spiked since the lockdown measures were introduced with 1.4M unemployment claims being made. Employers should aim to seek alternatives such as furloughing staff or reducing working hours rather than resort to redundancies, to mitigate the negative effect on the economy.
Jon Doyle is Founder and Financial Planner at Juniper Wealth Management. Advising clients since 2008 he has guided clients through good time, bad times and the ugly. With a clear vision on how advice should be delivered and strong opinions on how we should be investing money in order to live the life we want to live free from money worry.