During April investors enjoyed a sharp rebound in valuations, but the volatility returned at the beginning of May, serving as a reminder that the conditions remain fragile. Some progress has been made since the start of this month, but it has been a little bumpy. Results remain in negative territory for 2020.

The global economy will ultimately return to productivity, but for the time being valuations are driven by the pandemic newsflow and monetary/fiscal policy, both of which remain broadly positive.  By that we mean, the rate of infection has reduced substantially, countries are emerging from lockdowns and Governments globally continue to support business.

Most would agree that Government communications about relaxing the lockdown were, at least initially, unclear. However, the restrictions continue, albeit with a few minor tweaks and a little less enforcement. If you have not already seen the Governments written Recovery Strategy, you can find it here.

Time will tell whether relying on ‘common sense’ to contain the virus is a wise decision.  It should not however come as a surprise to see a temporary return to tougher measures over the next 4-6 weeks, or sooner, should the infection rate increase.  This on/off approach is likely to continue for a prolonged period.  While many businesses will find this challenging, they will soon adapt to the new normal, with continued financial support from the taxpayer probable.

Boris Johnson’s comments concerning a possible vaccine appeared a little pessimistic.  He wrote  “Indeed, in a worst-case scenario, we may never find a vaccine”.  His comments could well be genuine but, cynically, it could be to motivate people to return to work, rather than waiting out the pandemic for another 9-12 months.

There are around 100 different vaccines in various stages of development globally. Clinical trials of the Oxford vaccine, considered the front runner, are well underway. Several hundred people are participating mostly in Oxford and Southampton, with further sites planned. Sir John Bell, Regius Professor of Medicine at Oxford University, suggests that early signs of its effectiveness will be known by mid June. The New York Times provided an interesting article on the vaccine race and the backstory of the Oxford solution, which you can find here.

Finally, emerging from the lockdown will be of concern to many. Clearly no one should put themselves at any more risk than necessary.  However, it is worth reiterating comments from Chris Whitty, our Chief Medical Officer, from Monday’s Coronavirus Update: –

The significant majority of people will not get this virus at all.  Of those that do, some of them will get the virus without even knowing it.  Of those that get symptoms, the great majority, probably 80%, will have a mild or moderate disease.  An unfortunate minority will have to go as far as hospital, but most will just need oxygen, then leave.  A minority of those (admitted to hospital) will need critical care and sadly some will die.  But that’s a minority.  Its 1% or possibly lower than 1% overall.  And even in the highest risk group, this is significantly less than 20%.  The great majority of people, even the very highest risk groups, if they catch the virus, will not die.

As always, please get in touch if you need anything.