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Market update – Friday 19 June 2020

As we receive news that the United Kingdom’s chief medical officers have agreed that the COVID-19 threat level should be lowered one notch to ‘epidemic is in general circulation’ from ‘transmission is high or rising exponentially’, I have provided a round-up below of financial news for you.

London shares rose on Friday as a sharp rebound in retail sales in May bolstered hopes of a swift economic recovery from the pandemic-driven slump, while energy shares tracked a gain as oil prices rose on a pledge by OPEC and allies to meet their supply cut commitments.

The FTSE 100 was up 0.5% and on course to rise for the fourth week in five as optimism continued around the revival in business activity.

Data today showed retail sales volumes surged by a record 12% in May amid an easing in the nationwide shutdown imposed to contain the spread of the novel coronavirus. This confirmed that British shoppers bought much more than expected in May as the country gradually relaxed its coronavirus lockdown and online retailers boomed, adding to signs that the economy is moving away from its historic crash in March and April.

But official data also showed public borrowing hit a record high as the government opened the spending taps and public debt passed 100% of economic output.

The Bank of England on Thursday expanded its bond-buying plan, as expected, but slowed the pace of the programme, saying it saw some signs of an economic recovery. A separate survey on Friday showed consumer sentiment recorded its biggest improvement in nearly four years in June. The Bank of England (BoE) Governor Andrew Bailey said that the economy appeared to be shrinking a bit less severely in the first half of 2020 than the BoE had feared. But there was no guarantee of a strong rebound and unemployment would rise.

European shares rose with a focus on EU recovery fund talks which are high on the agenda at the European Council meeting today.

Wall Street was also set to open higher on Friday with the tech-heavy Nasdaq inching closer to a fresh record high on hopes of a bounce back in post-pandemic economic activity, as investors shrugged off rising new COVID-19 cases in several U.S. states.

As always, please do get in touch if you wish to discuss any aspect of your financial plan, or any of the above news.

To contact us by telephone, please call:

Ashford office: 01233 646 666 

Hastings office: 01424 457 080 

Kind regards,
Mark Eaton
Director

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Market update – Friday 5 June 2020

As the lockdown rules continue to evolve, we wanted to get in touch to provide you with some updates which, as well as our usual market commentary include information we thought would interest you on Absolute and investment matters.

Working with Absolute Financial Management

The safety of our clients and staff is our biggest priority, both from a physical and digital perspective.

We are closely following government guidance the quarantine and as you are already aware, we temporarily closed our offices at the end of March to protect our team, after putting into place our contingency office closure plan and ensuring we were all set up to be able to work at home effectively and securely. These arrangements have enabled us to remain fully engaged with our clients, team members and the service providers we use for your investments while protecting your data to the highest standards which comply with General Data Protection Regulation.

Mark and Spencer have been busy, at a distance, preparing the offices in our multiple locations for when we are able to return from our remote working arrangements. A full deep clean of premises has been carried out to the highest standard and regular, thorough surface cleansing will continue to be of utmost importance. COVID-19 risk assessments have been completed, which have led to several implementations which include amongst other things changes to the lay-out of each office, phased return of staff to office and emphasis on technology to reduce post and ensure we can communicate with you in a way that suits you best as we move into a new era.

We plan to begin the phased return of staff on Monday 6 July as long as guidance permits.

Exciting technological developments

We are focused upon working more efficiently and sustainably using technology.

Please be assured that regardless of any new technology we put into place, we will continue to work with you in the way that you feel most comfortable and are here for you.

New capabilities within our back office system will allow us to engage better with you; this includes, amongst many other things, a very simple secure messaging service and the ability for you to view your overall financial position in one place; a wealth dashboard if you will. You can expect future information on this shortly; we are working behind the scenes on putting it into place.

With offices temporarily shut around the country (ours and investment service providers we use), the need to reduce physical contact of any sort with you and our paperless office goals, we have reduced the post we send to you using technology. As well as the use of email, we have recently introduced DocuSign for paperwork, and electronic risk profiling as part of our exciting developments.

We are committed to assisting you in using any technology we use, to better enable us to work effectively with you while keeping a distance. If you should find anything difficult to use we are able to provide coaching and full support but of course we will continue to use more traditional methods of staying in contact as well.

Investing for positive change

Absolute is an avid supporter of investing in a sustainable way. That includes embedding sustainability practices into our own business and lifestyles.

This topic has come even more to the forefront given recent calls to action including not only social, environmental and financial issues highlighted by the coronavirus (decrease in demand for oil, cut of dividends, future demand issues with air travel decline and home working) but also the many fires experienced in Australia recently, the increasingly extreme weather globally, the plastics damaging our oceans. We are not alone in our belief that big changes to the world have been already set in motion and will continue to be seen in the immediate future due to these events.

One way we can make a contribution is to use positive change or sustainable investment strategies which have undergone our stringent due diligence and which we thoroughly endorse. These provide an extremely compelling investment solution designed to deliver strong returns while benefitting society through identifying long-term transformative developments, such as technological and medical advances and investing in companies that have a positive impact on society and the environment and can make for attractive and sustainable investments, using investments that are less prone to external shocks associated with such problems as obesity, pollution and environmental damage, and I will be very happy to provide you with more information on some options. These companies are solving society’s challenges and we believe these companies of the future will prosper over the long term, due to rising demand for their products and services, motivated employees and loyal customers; they are helping to build a more stable, resilient and prosperous economy.

The strategies we recommend have all performed extremely well compared to traditional solutions within their peer groups investing within their comparable risk profile.  This situation has been shown to be the case in a rising market, as well as during the recent market falls. We believe sustainable business practices offer resilience in a crisis and they have certainly demonstrated this.

Consider use of tax allowances now rather than later!

As we know, the cost of Covid-19 to our economy is already vast and needs to be paid for somehow.

With this in mind we urge you to take advantage of allowances such as ISA and pension annual allowances (including any carry forward annual allowance you may be able to use) now if you are able to.

In future reliefs and allowances are expected to be less generous or even cease to exist.

Some POSSIBILITIES which we could help you plan for now include:

Income tax

  • Increase to tax rates
  • Reduction or removal of personal allowance
  • Decrease to the level at which the personal allowance starts to be restricted below current level of £100,000

 Pensions

  •  Reduction of higher and additional rate relief on individual pension contributions
  • Merge of pension and ISA regimes into ONE single savings regime with a flat rate of tax (25%?)
  • Removal of the triple lock on the annual increase to state pensions

Please get in touch with us now so that we can do our job in helping you maximise your assets for your future.

Market news

Yesterday, the European Central Bank (ECB) increased both the size and duration of the Pandemic quantitative easing programme, but markets initially took a pause for breath before continuing their rally today. This programme will provide a structural support to European debt markets for several years.

We also heard yesterday that the US may deliver another $1tn fiscal stimulus package which would only intensify the level of liquidity supporting financial markets at the moment. Due to the timing of Congress’s two-week recess this is very unlikely to come together until the start of July, but the prospect of further fiscal stimulus provides a pillar of support for the economy and the market rally.

US Trade Representative Robert Lighthizer took a constructive tone when discussing the Phase One trade deal between the US and China. He cited the purchase of more than $100m of soybeans by China as evidence that the Chinese were holding up their end of the deal. These comments stand in stark contrast to the recent escalation in words by the White House and helps support the market narrative that electoral politics are supporting the tougher words rather than a desire by the Trump administration to tear up January’s deal. Lighthizer also commented that he did not favour the US pulling out of the WTO; another more conciliatory message.

The huge rally we have seen in risk assets over the last fortnight deserved a breather and this is what yesterday’s pause amounts to. The ECB largely delivered on what the market wanted and this will help liquidity in financial assets as well as provide some confidence that the ECB is not looking to exit the programme in the near term.

As always, please do get in touch if you wish to discuss any aspect of your financial plan, or any of the above news.

To contact us by telephone, please call:

Ashford office: 01233 646 666 

Hastings office: 01424 457 080 

Kind regards,
Mark Eaton
Director