~ Weekly Overview ~

Back to normal?

Welcome to this week’s overview, 

The World Economy

  • Globally more than 23.6 million cases and 868,000 deaths have been confirmed. The 3 worst affected countries in the world include India, US and Brazil. India reported the biggest single day rise in coronavirus cases anywhere in the world so far (August 30th). Meanwhile, the US and Brazil are now on a downward trajectory. 
  • Claims for unemployment benefits reached their lowest level since March in America. However, multiple countries reported record-breaking contractions in quarterly GDP. India experienced a reduction of 25% between April and June, Brazil 9.7%, Turkey 11% and Australia 7%. These countries are now all experiencing a recession, and in Australia’s case this is for the first time in almost 3 decades. 
  • Countries continue to pull out all the stops to preserve their economies. Spain has extended its furlough scheme indefinitely whilst France has announced a recovery plan worth 4% of their GDP (€100bn). This will go towards green initiatives, lower taxes and employment and education initiatives for the youth. 
  • The dollar reached another 2-year low against the euro, after the Fed announced that they will not raise interest rates for years to come, and inflation will be able to run above 2% sometimes. The EU’s inflation rate is -0.2%, the first period of deflation in 4 years, largely due to cheaper energy prices. 
  • Finally, in the UK, Andrew Bailey the Governor of the Bank of England announced that consumption has bounced back relatively quickly, whilst the situation of investment still remains dire. He reiterated his concerns for the recovery of the UK’s economy. Some sectors will not reach pre-pandemic levels, meaning a reorientation of the economy is likely in the foreseeable future. There is also a possibility of expanding Quantitative Easing in England. 

This Week in Business

  • A wave of importance on sustainability has become apparent this week for many businesses. Unilever have pledged that by 2020 they would switch to renewable of recycled sources of carbon and no longer use chemicals derived from fossil fuels. In addition, Boston Consulting Group announced their bold plan to be “net zero” by 2030. 
  • Apple (£1.7tn) is now worth more than the total share price of the FTSE100 companies (£1.5tn). However, Wall Street has gone into reverse as tech firms such as Apple, Amazon, Alphabet, Microsoft and Facebook – fell between 4% and 8%. 
  • Zoom has experienced skyrocketing revenues leading to double the profit for the company since the beginning of the coronavirus pandemic. Profits soared to $186m, while customer growth rose 458%, compared with the same period in 2019, despite facing political scrutiny for having ties with China. 
  • According to Torsten Müller-Ötvös, the boss of Rolls-Royce, the global demand for luxury vehicles is rebounding despite the pandemic. He also announced that markets in the US, Europe and Asia were “more or less back to normal”. This can be proven as the company recently launched their newest model “Rolls-Royce Ghost” which will retail at around £250,000. 

Below, you can find the S&P500 heat map, which you can see is very different to last week. 

Source: Finviz

Here you can also find extra resources on other companies signing the ‘sustainability pledge’

Have a nice weekend!