Wednesday’s mood – a false sense of security

Published on 05-08-2020 12:13:44

Russia is hailing its launch of what could be the world’s first COVID-19 vaccine as a ‘Sputnik’ moment, but it doesn’t yet meet World Health Organization standards. China’s early vaccine, meanwhile, may be caught up in geopolitical tensions.

Russia is hailing its launch of what could be the world’s first COVID-19 vaccine as a ‘Sputnik’ moment, but it doesn’t yet meet World Health Organization standards. China’s early vaccine, meanwhile, may be caught up in geopolitical tensions.

The fear is that these announcements are creating a false sense of security and the FTSE 100 seems to have caught this mood too, buoyed by hopes of a US stimulus package.

Yet gold has passed $2,000 an ounce for the first time as wary investors look for a safe haven, while the yield on 10-year US Treasuries is on the verge of falling to its lowest level ever and a man who forecast a pandemic two years ago reckons COVID-19 is merely a harbinger of other plagues to come.

If you need some entertainment to divert your attention, Disney is pinning its hopes of rebounding from a near-$5bn loss on streaming its long-delayed ‘Mulan’ live action feature. If food provides that distraction, the upward trajectory of plant-based produce pioneer Beyond Meat has finally stalled, but chocoholics are hoping it’s true that their treat can help protect them against heart disease.

If our sense of security is not false, it’s certainly uneven, which may explain why this unusual recession is hammering Coca-Cola but not PepsiCo.

In motoring, monthly UK car sales are up 11% and Japanese automakers are posting double-digit growth in China, but BMW has plunged into losses.

However, some things seem certain enough. We have new research out on our successful clients Games Workshop Group, Greggs, Keywords Studios and Picton Property Income . Britain also has its biggest takeover of a listed company this year.

There’s gloomy certainty too, with more jobs going at Dixons Carphone, Pizza Express and William Hill and Virgin Atlantic Airways filing for US bankruptcy protection, while Britain’s banks are bracing for $22bn of loan losses. Google faces yet another investigation and London rents are set to slump to their lowest for six years.

But cheer up. The market is still up today.

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