Fears of a second coronavirus wave hang over markets - James Rowbury

This week’s markets have made some consistent gains as investors sentiment was encouraged by manufacturing PMI figures around the world.

Despite some gradual signs of economic recovery, consumers remain cautious as fears of a second wave of coronavirus infections in Europe continue.

As the Government relaxed guidance regarding working from home, workers across the UK have slowly been returning to offices.

Since the announcement, in London, footfall was only 2% higher, reflecting how the number of visitors and office workers remained low.

The overall footfall is 68% lower compared to this time last year. The Prime Minister encouraged companies to allow staff back into the offices in order to help the struggling hospitality sector and increase activity in city centres.

Nevertheless, many companies, such as NatWest, have announced that most of their staff will not return to offices until 2021.

The FTSE 100 was up 2.92% this week, as the release of manufacturing PMIs encouraged a strong start to August.

Controversy surrounds US President Donald Trump’s approval of Microsoft buying the social media app TikTok. In an unprecedented move, he now wants a cut of the deal for the US Treasury, in exchange for approving the acquisition.

The White House could ban TikTok for all American users if an acquisition deal does not take place by 15 September. The new deadline and the request for a payment have added further pressure on both parties to agree on all the technical details involved in the complex deal.

The President suggests that Microsoft should buy 100% of the business rather than 30%. Talks could result in Microsoft purchasing TikTok’s service in the US, Canada, Australia and New Zealand.

Over the last week the company has gained 6.75%, boosting investor sentiment.

The S&P 500 has gained 3.56% this week, as US lawmakers make progress on an economic aid package.

China’s manufacturing industry has improved at its fastest rate in almost 10 years after a third successive month of growth.

The Caixin’s purchasing managers’ index reached 52.8 in July from 51.2 in June, its highest level in over nine years. The new figures reflect a bounce- back in economic activity after suffering a contraction at the beginning of the year due to COVID-19 lockdowns.

China’s economy returned to growth in the second quarter, with GDP rising 3.2% compared with the same period in 2019. The industrial sectors pushed the country back to growth; however, retail sales continue to suffer.

Yorkshire-based electrical power generation company Drax Group has reported strong interim results for 2020, with a 30% improvement in adjusted EBITDA, as it reached £179m.

The firm stated that £224m in coal obsolescence charges caused an operating loss of £32m in comparison to a profit of £34m last year.

Losses per share came in at 14p, in comparison to earnings of 1p at the beginning of 2019. Dividends increased to 6.8p per share from 6.4p year-on-year and the full-year dividend is to be up 7.5% to 17.1p as long as the impact of COVID-19 is in line with expectations.

The company seems to be on a profitable and sustainable path where it can continue to support employees and customers during the COVID-19 crisis.

In the last week, the company has gained 3.3%.

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