Last Week in the City

Garry White provides a round-up of the market moves and the global investing outlook this week ending 12 June.

This content is more than 6 months old now, please visit the news area of this site for more recent content

  1. Garry White

Grim economic and health news from the US shocked markets on Thursday after equities had been rising high for some time on central bank action. The sell-off was prompted by a bleak view of the US economy by the Federal Reserve, and reports of rising coronavirus cases from some US states.

Covid-19 cases in New Mexico, Utah and Arizona rose by 40% for the week ended Sunday, with hotspots also seen in Florida and Arkansas. The jump in cases has raised concern that lockdown restrictions had been loosened too soon and indicated a second wave of the infection was possible.

The FTSE 100 fell 5.3% over the course of the week by mid-session on Friday, with the FTSE 250 sliding 6.2%.

The market review continues below…

Planning through the generations

Planning for school fees? It’s hard to know where to start. Giving children a private education is the dream of many parents and grandparents. It could be a way to boost your child or children’s career and income opportunities. Click here to find out what you need to do.

Boomerang parents: As the cost of living in retirement soars, 22% of UK adults say they will go back to living with their parents. Good financial planning can help with these costs – discover how here.

Investing to change the world: Gone are the days when a chief executive could appear on the media and justify the company’s stance because it was in the financial interest of shareholders. Find out more about socially-responsible investing here.

Charles Stanley Radio

To support our remote living and working lives, we have launched Charles Stanley Radio to bring you the latest news from Charles Stanley.

Listen to expert commentary from our research team and analysts, informal Q&As with our colleagues to hear about their experiences adapting to this new way of working and specialist content from our partners.

Spotlight Session: In this episode, we discuss the merits of Active and Passive investing in times of crisis and what we think might happen next. Listen here.

Spotlight Session: Notes from a crisis. John Porteous, Charles Stanley’s Group Head of Distribution, and Heather Hopkins, founder and Managing Director of Next Wealth, share their immediate learnings from this crisis, drawing on the experience of Charles Stanley’s own investment managers and NextWealth’s access to insights and trends. Listen here.

The radio page with all previous recordings can be found here.


Central bank action is continuing to prop up markets. Indeed, it appears we are now in an era of mutually-assured reflation, as banks and governments outbid each other to try to combat the great Covid-19 recession. Discover more about how policy is driving equity gains here.

Proving the point, a gloomy outlook from the US Federal Reserve hit markets on Thursday. Chair Jerome Powell warned that the US faced a "long road" to recovery and confirmed the central bank would keep interest rates near zero for the foreseeable future. A policymaker forecast released by the Fed showed rates remaining low until the end of 2022. "This is going to take some time," Mr Powell said. We look at the speed of the recovery from lockdown here.

UK GDP slumped by 20.4% in April, as Britain’s’ economy was frozen by the lockdown. This followed a 5.8% contraction in March.  

The French economy is set to have contracted by 15% between April and June, the Banque de France has forecast.

German industrial production shrank by 17.9% in April month-on-month, not quite as bad as the UK’s 20.3% decline in industrial output.

The Organisation for Economic Cooperation and Development (OECD) expects Britain’s economy to suffer the worst damage from the Covid-19 crisis of any country in the developed world.

A slump in the UK’s national income of 11.5% during 2020 will outstrip the falls in France, Italy, Spain, Germany and the US, the OECD also estimated.

Germany’s economy, the largest in Europe, is expected to contract by 6.6% this year while Spain’s GDP is seen falling by 11.1%, Italy’s by 11.3% and France’s by 11.4%. The US, the world’s largest economy, is forecast to take a hit of 7.3%.


Brexit talks remain slow. The European Union (EU) Brexit negotiator Michel Barnier said Britain was seeking a trading relationship that is too close to that of an EU member. He urged London to adjust its demands in the four months left to reach a deal. Last week, a British official said it was “obvious” the EU had to show more flexibility, after talks made no progress.

Washington wants to halt US investment in Chinese companies and is preventing American federal pension funds from investing in Chinese companies. This looks like it will continue to escalate. Indeed, this week US officials asked videoconferencing group Zoom Video Communications to clarify its data-collection practices and relationship with the Chinese government after the company said it had suspended user accounts to meet demands from Beijing. The accounts held an event to commemorate the 31st anniversary of China's Tiananmen Square crackdown. Garry White looks at the China investment issue here.   

Huawei launched a newspaper and internet campaign to mark 20 years of business in the UK. In an open letter to the British public, the Chinese telecoms group said it is "as committed as ever" to provide "the best equipment" to the UK's 5G mobile and full-fibre broadband providers. The campaign is in reaction to a new security review that could lead the UK government to ban use of Huawei's 5G network kit. Garry White thinks the current dispute over 5G will change American capitalism forever. Read his explanation here.

China and the US should resume timely communication on trade and other issues, an adviser to the Chinese cabinet said, stressing that the world's two biggest economies are too intertwined to be decoupled.

Protests in the US following the death of George Floyd in police custody have now added a racially-charged element to the US presidential election. Click here for more.


Angel Gurría, the head of the OECD, said countries must agree on an approach for taxing tech giants, or they risk a widespread trade war. The warning came as an increasing number of countries, including the UK, impose new levies on digital sales. Last week, the US launched a probe of the taxes, saying they unfairly target American companies. This could lead to the US imposing tariffs.

Honda said it is dealing with a cyber-attack that is impacting its operations around the world. The attack affected its ability to access its computer servers, use email and otherwise make use of its internal systems. These attacks are becoming increasingly common and Garry White looks at the growth opportunity for cybersecurity specialists here.


Brent crude prices fell about 8% over the week to trade at about $38.80 a barrel at mid-session on Friday. The falls were prompted by concerns of a new spike in infections in the US and a downward assessment of growth prospects from the Fed.


All non-essential shops will be allowed to reopen in England on Monday. Retailers can open as long as they follow safety guidelines, or they could face enforcement notices. Pubs, bars, restaurants and hairdressers will not be able to reopen until 4 July at the earliest.


Britain’s three largest airlines filed papers in the high court to seek an urgent judicial review of the government’s quarantine laws, which they said were having a devastating effect on tourism and the wider economy. IAG’s British Airways, easyJet and Ryanair say the rules, which came into effect on Monday and require passengers arriving from abroad to self-isolate at a single address for 14 days, are flawed and will cost thousands of jobs.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.


More from author

  1. Garry White

    Last Week in the City: Resurgent infections threaten recovery

    Date: 12th Jun 2020 14:10pm

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

  2. Garry White

    Robot brains will fight the machine wars of the future

    Date: 12th Jun 2020 14:10pm

    The US and its allies are starting to talk about the implications of using artificial...

  3. Garry White

    Last Week in the City: UK rates to fall below zero?

    Date: 12th Jun 2020 14:10pm

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

Most read articles

  1. Last Week in the City

    Last Week in the City: Resurgent infections threaten recovery

    Date: 12th Jun 2020 14:10pm

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

  2. Last Week in the City

    Last Week in the City: UK rates to fall below zero?

    Date: 12th Jun 2020 14:10pm

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

  3. Last Week in the City

    Last Week in the City: Technology slump accelerates

    Date: 12th Jun 2020 14:10pm

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

Investment involves risk. You may get back less than invested.