UK suffers sharpest quarterly decline in economic activity in the last 65 years - James Rowbury

Yet another week has seen markets move on hopes of a Coronavirus vaccine and economic stimulus packages as global markets made substantial gains.

The announcement of the UK falling into a recession did not appear to discourage investor sentiment, where over the last week the FTSE 100 gained 2.75%.

According to the latest figures from the Office for National Statistics (ONS), for the first time since 2008/09 the UK has entered into a recession, with the sharpest quarterly decline in economic activity in the last 65 years.

On an annual basis, UK gross domestic product fell 21% in three months to June, after having shrunk 1.7% in the first quarter of 2020.

The contractions reflect the ongoing restrictions and social distancing measures which have been put in place due to the pandemic. Nevertheless, the ONS highlighted that due to a slow

easing of lockdown measures, including the re-opening of non-essential shops, GDP did increase by 8.7% in June.

On Tuesday, President Vladimir Putin announced that Russia will be the first country to grant regulatory approval to a vaccine against Coronavirus.

In the next week, the country will begin mass production and the immunisation of key workers. The approval followed only two months of human trials, as the testing and trial procedures were rushed in order to beat western pharmaceutical companies.

The vaccine was developed by the state-run Gamaleya Institute and was financed by Russian Direct Investment Fund. Nevertheless, experts have expressed doubts over the safety and efficacy of the vaccine.

On the other hand, President Donald Trump announced a US$1.5bn contract with bio-tech company, Moderna, to produce 100 million doses of a potential Coronavirus vaccine.

As soon as the vaccine is approved, the US will be ready to rapidly produce 100 million doses and a further 500 million shortly afterwards.

At present, the firm is conducting phase three clinical trials of its potential vaccine.

The US is currently investing in the development of the top six vaccine candidates and in manufacturing plants, as well as storage and delivery facilities, hoping that a successful vaccine can be distributed as fast as possible.

Nevertheless, Moderna’s shares have dropped 8.95% in the last week.

This week, the US S&P 500 has gained 1.08% as tech stocks drove the market closer towards a record high, while rising hopes for a vaccine and the prospect of a stimulus package in the

US are enabling investors to look past the global crisis.

The chief executive of Yorkshire-based house building company Persimmon has sold shares worth £1.3m, leaving him with only a 0.2% stake in the firm.

In what is seen as a worrying signal for the sector, Mr Jenkinson announced he would step down after just over a year in the role.

Nonetheless, Persimmon’s shares have recovered almost two-thirds of the value lost during the Coronavirus pandemic, with the group reporting a sharp rebound in activity since May.

A helping hand from the government’s temporary cessation of stamp duty, alongside pent-up demand following the UK’s lockdown, will have aided this figure.

We now look to the ensuing economic picture, as job cuts make their impact to mortgage applications and the viability of transactions potentially slow.

Over the last month, average weekly net private sales have been 30% higher than at the same time last year.

Persimmon’s strong balance sheet reported a marginal increase in cash reserves to £833m at the end of June. Since February last year, Persimmon’s shares have risen nearly 8%.

Please note that investments and income arising from them can fall as well as rise in value and you may lose some or all the amount you have invested. Past performance and forecasts are not reliable indicators of future results or performance. Please note that thiscommunication is for information only and does not constitute a recommendation to buy or

sell the shares of the companies mentioned.

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