Markets broadly remained in positive territory last week on the back of encouraging reports from vaccine trials. Data for the second quarter of this year demonstrated that the global contraction has been less severe than first feared. China, who was the first to reopen its economy, recovered faster than expected in June compared to the same period last year, with exports rising by 0.5% and imports by 2.7%.
This positive news was offset by political tensions between the US and China and the UK and China. Trade wars between the US and China continue to simmer in the background and the UK’s decision to ban all Huawei equipment from the UK’s 5G networks has also caused a backlash, with the media citing pressure from the US as the reason for the UK’s proposed ban.
Away from trade tensions, global virus deaths continue to climb with the US topping the list with 140,000 deaths. Some 30 States in the US have experienced an increase in cases in the last week, which has led to regional governors rethinking lockdown plans and, in some cases, backtracking on plans to ease restrictions.
The European Central Bank (ECB) met last week and left rates unchanged. European leaders’ marathon discussion, now in its fourth day, over the €750bn European Recovery Fund, remains in deadlock. There is a clear divide between the more frugal countries and those that are likely to be the biggest recipient of emergency funds. Discussions continue today.