The easing of lockdown measures in England was announced as expected, paving the way for a potential boost of the hospitality and tourism sectors, with pubs, restaurants and hotels among the facilities able to reopen on Saturday, 4th July. Coupled with the reduction in the social distancing guidelines, the focus has certainly shifted away from overwhelmingly protecting the health service, to injecting a boost for the UK economy.
While the UK starts to reopen, we are seeing the US start to close down again. Lockdown measures in New York, New Jersey and Connecticut have increased, with a two-week quarantine being imposed on visitors from those states that have an elevated infection rate. This action was driven by the US having its largest daily increase in new COVID-19 cases since the pandemic began. Record increases were confirmed by Texas, California and Florida. Apple has closed seven of its stores in Houston and Disney confirmed that plans to reopen its parks on the 17th July could be pushed back.
Global stocks have been selling off amid fears that the rise in the numbers of cases could ruin any potential economic recovery. Fuel was added to the fire with the IMF (International Monetary Fund) revising down its forecast for global growth to -4.9% for 2020. Whilst this is undoubtedly a pessimistic projection, the current environment does not lend itself to any degree of certainty.
As we wrote last week, markets will overreact to both good news and bad. The markets rose over higher than expected US retail sales data a week ago and have now dropped over the fear of rising infection rates and gloomy predictions. Both are arguably overreactions from a market sensitive to news flow and data points.
