Unemployment shapes the recovery
As equities take a more optimistic view than bonds on the likely economic impact of the pandemic, which financial market will be closer to the truth?
Markets Weekly
07 May 2020
4 minute read
Week ahead
The UK and the eurozone gross domestic product (GDP) data for the first quarter (Q1) will indicate how much the rising concerns in financial markets about the potential economic impact of the coronavirus pandemic are justified. With COVID-19 cases beginning to spread in March in both regions, growth in Q1 is likely to be weak.
In Germany and France, the April final year on year (y/y) inflation data on Thursday and Friday, respectively, is likely to confirm subdued price growth. Disruption to both economies from containment measures is hitting demand more than from interruptions caused in the supply chain, with the latest readings lower at 0.8% and 0.5% respectively.
Both China and the US publish April retail sales and industrial output figures on Friday. In the former, while sales growth has remained weak, at -15.8% y/y, industrial output seems to have rebounded from previous weakness to -1.1% y/y in March, but is still contracting.
In the US, March data for both retail sales and industrial production weakened to -8.4% and -5.4% m/m respectively – raising concerns about how much the pandemic is hurting the economy. Investors will also focus on the jobless claims data on Thursday, with new record highs regularly being set in recent weeks.
Chart of the week
Will COVID-19 change how investors invest sustainably?
The COVID-19 pandemic will significantly shift many aspects of our lives, including how we invest. Even before the outbreak, we had observed the emergence of a “new normal” for investing. Increasingly, investors were considering how investing sustainably could benefit their portfolio returns and the wider world.
Over the last few years, Barclays has supported research into the leading investors driving this movement. Investing for Global Impact is a global study, covering 410 investors with $125bn of assets under management, of how individuals and families, family offices, foundations and charities invest and donate their capital for impact.
Many valuable insights and trends have surfaced over the seven years since its launch. Respondents’ proportion of portfolios invested with impact considerations has almost doubled, to almost a third of their portfolio’s, by value, last year.
As the chart shows, investors are making sustainable and impact investing core to their investable portfolio. Last year new respondents caused a peak in the stage of having “made [their] first impact investment and are considering further impact opportunities.”
Whether this trend continues or accelerate as the pandemic causes untold damage is unknown. For many though, the crisis is profoundly changing our lives and the world, including the role of family and wealth, environment stewardship, social cohesion, globalisation and capitalism.
With 2020 research survey now open, we want to hear from more investors about how these trends are affecting your current and future portfolios. To participate and share your opinions, view the Investing for Global Impact survey. For more information about the research or to receive a full copy of the prior reports, please reach out to your Barclays contact.
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