Market Update

Global equity markets closed the week and the month on a positive note, signaling a growing understanding in the market that the economic and equity market challenges faced in February and March were unique due to the transient nature of the coronavirus outbreak. The markets are increasingly optimistic that once economies fully reopen, rapid economic growth will ensue, bringing back most of the jobs lost during the lockdown restrictions.
Despite recent tensions between the US and China, exemplified by the FTSE-100's fall of 142.19 points (2.29%) on Friday, May 29, 2020, President Donald Trump's late press conference didn't significantly escalate the situation. While he criticized China for the new national security laws in Hong Kong and announced measures like restricting Chinese nationals' entry to the US and reconsidering Hong Kong's special trading status, he refrained from pulling out of the Phase 1 trade deal with China. This measured response, despite the tough talk, helped ease market concerns.
The FTSE-100 closed May with a gain of 2.97%, marking its second consecutive winning month after a 4.04% rise in April. However, it remains down 19.43% since the beginning of the year. Client portfolios, diversified across various asset classes and regions, have shown relatively smaller losses due to the disciplined investment process, with typical Cautious portfolios down 5.63%, Balanced portfolios down 10.18%, and Adventurous portfolios down 8.30%.
Looking ahead, the focus remains on key data releases, particularly the US weekly jobless claims on Thursday (June 4, 2020), alongside other significant US data like ISM manufacturing on Monday (June 1, 2020) and employment data (non-farm payrolls, unemployment rate, participation rate) on Friday (June 5, 2020). Eurozone unemployment rate, retail sales, and an ECB meeting are also noteworthy, especially regarding potential increases in the Pandemic Emergency Purchase Programme due to declining Eurozone economic data. Chinese PMI data and ongoing Brexit negotiations, which carry a June 30, 2020, deadline for any transition agreement extension, add to the market-moving events to monitor.
Notably, Trump's response to China's new security laws in Hong Kong was less damaging than feared, avoiding new trade tariffs and preserving the US/China Phase 1 trade deal. Consequently, global equity markets opened higher, with Hong Kong's Hang Seng index closing up 3.36%, China's CSI 300 index rising 2.70%, and the FTSE-100 trading up over 50 points (0.90%).
Additionally, positive sentiment was bolstered by China's manufacturing and non-manufacturing PMI data, with the non-manufacturing index rising to 53.6 and the manufacturing PMI indicating expansion, despite a slight decline due to global lockdowns. Moreover, China's Caixin manufacturing PMI data for June displayed further recovery, reaching 50.7 and indicating a revival in Chinese factory activity.