Footfall and fatigue
Medium term confidence is abounding after more vaccine news. The UK is gearing up for a rollout as early as next week after approving the Pfizer vaccine. While we’re merely at the start of this journey, investors and financiers are feeling optimistic, with the government touting spring 2021 as when things can potentially start returning to normal, just in time for the fiscal year that starts in April.
Despite warnings to not let their guard down, it appears “Covid fatigue” has taken affect as people flocked to the shops on the first day of the new tiers in the UK. Footfall across shops in England according to analyst Springboard was up by 86.6% compared with last Wednesday, but then that was in a lockdown. However, the uplift is bigger than the rise in footfall seen after the original, much longer lockdown once lifted in June, so it appears Christmas shopping has been the lure.
A recovery for retail is very much needed, after a week of casualties consisting of Bonmarché, Topshop (Arcadia group as a whole) and 242-year old Debenhams. “Wild Wednesday” fell short by 13.8% compared to purchases made on Black Friday, meaning retailers with a physical presence are playing a very tough game of catch up. RetailTrust, an organisation for shop workers has said that across the course of the pandemic alone, roughly 150,000 jobs in retail are going to be lost.
Sterling fell sharply after a series of blows for a Brexit, less than 30 days to go until deadline day. Michel Barnier has said talks are “hanging in the balance” after France has apparently asked that the EU declare that talks have failed, unless the UK accepts what the EU is after within 48 hours.
The ultimatum spooked sterling so severely it lost pretty much all of its gains against the euro throughout November. However, there is a silver lining which optimistic investors will be glad to hear. Typically negotiations become most heated when a deal is about to be made, and some are seeing this serious escalation as a sign that a deal is very much still on the cards.
Headlines in the newspapers this morning think a deal could happen as early as today, while Ireland’s foreign minister Simon Coveney has said its coming in the next few days, it is reported. While the rumour mill is certainly doing its job, and markets are jittery without anything substantial, it is important to note that negotiations did heat up and became very intense just before the EU Withdrawal Agreement was finalised.
Trade war tit for tat
China has also just announced new restrictions on “controlled items”, such as the export of military technologies. The rules is seen by many as a response to actions by the US, with TikTok and Huawei as some of the tech companies Washington has sought to crack down on. It will be interesting to see how US President-elect Joe Biden tackles the trade war in 2021.
Biden has stated he will keep tariffs in place for now, and that the best strategy would be to have allies from Europe and Asia “on the same page.” Still, try telling Australia that, who now out of recession, are reeling from serious problems in the country’s relationship with China.
The Australian economy grew 3.3% in the three months to September, driven by increased household spending and the lifting of Covid-19 restrictions. Despite this good news, as China is Australia’s biggest export market, the worsening relations have seriously worried investors.