Possibly. Donald Trump’s opinion poll ratings slid below 40% last week, the first time since 2017 pushing the Democrats into the lead. This weakness makes Trump even more unpredictable than normal and he was quick to look for scapegoats, notably the Democrats and China. Despite Trump’s attack, China continued to keep their end of the bargain by confirming plans to increase purchases of US agricultural products. US weekly jobless claims added further woes to Trump’s growing list, coming in at a disappointing 1.48 million.
It was a more positive picture in Europe, whose indicated PMI (a measure of a country/region’s economic strength) for June shows that activity has accelerated. In France and Germany, data was markedly better than expected at 47.5, up from 31.9 in May and beating expectations of 42.4. At a country level, France led the way, posting 51.3, pushing the country in to expansionary territory, up from 32.1 in May and beating expectations of 46.3. While this is good news, we treat these figures with caution and note that the jump in June was due to restaurants reopening and mobility restrictions being lifted.
Fears of a second coronavirus wave in autumn hit risk appetite last week as new cases increased sharply in the US, Brazil and India. However, there was reassuring news from China, whose new lockdown measures appear to have stopped the spread of the virus in Beijing. Over the weekend, reports of a spike in Leicester may see the UK take a similar approach to China, locking down the city to keep the spread under control.
Despite investor concerns, central banks remain accommodative and economic indicators show signs of improvement, although the Democrat lead in the US election polls could spook markets.
