OCM Commentaries

Market Commentary 24th June 2020

By June 24, 2020 June 25th, 2020 No Comments

The Eurozone Outlook Brightens as Economic Activity Returns

Positive developments emerging over the week included the flash release of the June Purchasing Managers’ Index (PMI) values for the Eurozone, with the data confirming that we are starting to see some signs of normalisation in the June data. The composite PMI for the Eurozone increased to 47.5 from 31.9 in May, indicating that although not quite enough to bring the value above 50 (the level that separates contraction from expansion), activity is responding to the loosening of lockdowns, and the services and manufacturing sectors are beginning to recover ground lost in April. The data shows a significant improvement in conditions since April. At the same time, according to figures from the European Commission, consumer confidence in the area is improving and now close to the March number, while consumption is rebounding on the opening of shops and other non-essential businesses.

Early indicators suggest that the initial bounce in economic activity may be stronger than expected, however the pace of recovery remains heavily dependent on the number coronavirus cases remaining under control across the bloc. The European Central Bank remains supportive as leaders discuss a 750 billion Euro recovery fund, indicating that support for risk assets is likely to remain despite continued economic weakness owing to the coronavirus lockdowns.

The UK Relaxes Social Distancing Measures

This week, the Prime Minister announced a further relaxation in lockdown measures, with the 2-metre social distancing guidance revised down to 1-metre to facilitate the reopening of pubs, restaurants and hotels in England from 4th July. The decision to reopen more of the economy remains a controversial decision due to continued virus risks, however with the UK now in a better position to deal with a second spike in cases while the economy continues to suffer as businesses remain shuttered across the UK, Boris Johnson is now driving a return to normality. Data suggests that UK economic activity is beginning to recover as restrictions have been loosened in recent months, reinforcing expectations that economic activity bottomed in April.

For more information on our UK outlook, please see the attached Market Update document.

The US Weighs New Tariffs On European Goods

As the global economy grapples with the fallout from the pandemic, trade tariff concerns returned this week as it emerged that the Trump Administration is considering new tariffs on $3.1 billion of exports from France, Germany, Spain and the UK. The move is part of the US response to the ongoing fight at the World Trade Organisation on aircraft subsidies as talks broke down between the two sides. It is likely that the EU will impose its own sanctions in the absence of further discussions, adding to longstanding US-EU tensions.

US Bailout Deal

With the US facing challenges at home as the number of virus cases across the country increases, it is becoming clear that more government support will be needed to support the US economy through this period of weakness. As it stands, Congress is weighing a new ‘Phase 4’ coronavirus aid package to keep the economy afloat. Congress will need to act quickly to do so as new cases slow reopening plans in some states.

Key Events We Are Watching This Week:

  • Thursday: US Jobless Claims
  • Friday: US Consumer Confidence
  • Monday: Eurozone Consumer Confidence

For anyone who wants further data to substantiate the position please review the attached Global Economic Update document and the Economic Dataset below.

Model Portfolios & Indices

Global stock markets remained volatile over the week as the global economy eases lockdown restrictions following the Covid-19 pandemic. Over the week, performance of major indices remained mixed as heightened virus fears weighed on optimism over a recovery in economic activity. The portfolios gained over the week, benefitting from a high level of diversification in asset classes and geographies.

Over the coming weeks, as we are now normally invested, we expect intraweek performance to be more in line with the benchmark once again, and we are optimistic on the medium-term outlook from here. Year to date, we have now recovered the bulk of the March coronavirus decline, and we are in a strong position moving forward looking ahead to the second half recovery and strong growth in 2021.



Important Information


Past performance cannot be used as a guide to future performance and the value of your investment will fall as well as rise in value.  You may not get back all of your investment and the final value of your investment will depend on the performance of your portfolio.  The actual performance of an individual client’s portfolio may differ due to different funds being used and being restricted in relation to certain asset allocations.  Performance figures quoted include fund manager charges but exclude adviser, discretionary, custodian and switch charges.  Unless stated, income is reinvested into the portfolio.  The information contained in in this document is for information purposes only.  It does not constitute advice or a recommendation or an offer or solicitation for investment. 


This Day in History


On this day in 1540, King Henry VIII commanded his 4th wife, Anne of Cleaves, to leave the court. He later annulled the marriage after 6 months of marriage and she became known as the King’s Beloved Sister.


Have a great week,


Jason & Gina