The level of support from both global central banks and governments has been both significant and swift to boost their economies in this challenging environment.

In July we saw a number of packages introduced; the UK announced a number of measures at the beginning of the month (more on that below) and European leaders approved a €750 billion deal that was sealed after four days and nights of intense negotiation that saw threats of walkouts and fierce intransigence.

Whilst over in the US, the Republicans put forward a proposal for another Coronavirus stimulus bill worth around one trillion dollars. This would clearly be a big stimulus on the US economy; the Democrats and Republicans in the US Congress currently seem far from reaching an agreement.

As mentioned earlier, at the beginning of the month we saw another step from the UK government to support the economy with UK Chancellor Rishi Sunak announcing a £2 billion scheme aimed at alleviating youth unemployment by subsidising work placements in his Coronavirus recovery package.

To try and stem the amount of government support needed, the Chancellor announced a new “job retention bonus” for employers who bring back furloughed staff, when the Coronavirus Job Retention Scheme ends.

The chancellor has also announced a six-month cut to VAT for the hospitality sector from 20% to 5% and an immediate stamp duty “holiday” to temporarily exempt the tax on the first £500,000 of home purchases in England and Northern Ireland.

Finally, we will all get the chance to have a discounted meal on the government; everyone will get 50% off meals in participating restaurants during August.

Away from government action stock markets paused for breath in July after a strong second quarter.

Earnings season for the second quarter was also in full swing in the US and Europe and we got an idea of how companies have fared during the brutal conditions in the second quarter. Whilst it is interesting to look back at how companies have performed, it is just as important, if not more important to look forward and see how businesses are adapting and preparing for the new environment that we find ourselves in.

During the month the big developments in markets were in the Gold price which surged to a new high and sterling recovered significantly, ending the month at over $1.30 and at pre-pandemic levels.

Alex Brandreth – Chief Investment Officer

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