Introduction 

For the second month in a row, we went back to the previous month’s Commentary before we wrote a word. How did we leave April in this rapidly changing world?

With the Prime Minister having just come out of hospital and having become the father of a baby boy. With plenty of bad news to digest as financial institutions seemed to compete with each other to make dire predictions – but with the good news that all the markets we cover in the Commentary had risen during the month.

May didn’t quite bring us a clean sweep: the markets in Hong Kong and India fell during the month. But the majority of the other markets on which we report made gains. They are still a long way from recovering all the ground they have lost due to the pandemic, but most countries are now starting to ease lockdown – and taking significant steps to help their economies recover.

There has, though, been plenty of bad news in May. That was inevitable, and there will be more to come in June. As Chancellor Rishi Sunak has said, it will be impossible to protect every company and every job – be that in the UK or elsewhere. So May was the month when some of the threatened job losses became a reality. It was also the month when tensions over Hong Kong escalated rapidly.

There was, though, good news if you looked for it – not least for the carmakers of Sunderland. Whether Elon Musk’s new son will look back on May 2020 quite so fondly when he’s a teenager is another matter…

UK 

The UK – like virtually every country – continued its policy of economic stimuli as it ‘fought back’ against the global pandemic. Chancellor Rishi Sunak announced that the furlough scheme – which by the end of May covered 8.4m employees – would be extended to October, although firms will gradually be asked to contribute an increasing amount towards the cost. There was also more help for the self-employed although, inevitably, there were still plenty of stories of people ‘falling through the cracks’ in the safety net.

We are now seeing gradual moves to get the UK back to work. As we write, car showrooms and outdoor markets have re-opened, and ‘non-essential’ shops will re-open from 15th June (although we suspect that every shop is essential to its owner).

Marks and Spencer, though, put into words what many people have already accepted. Customers may “never shop the same way again,” said M&S boss Steve Rowe. “Whilst some customer habits will return to normal, others have changed forever.”

With footfall in high streets, retail parks and shopping centres falling by 80% in April, it is hard to disagree. Nor is it any wonder that so many shops are seeking to renegotiate rents with landlords, or simply refusing to pay. Sandwich chain Pret A Manger was one company that admitted to calling in consultants to help renegotiate its rents as it “radically adapted” its business model to cope with more people working from home.

Away from the high street, the month got off to a bad start with Make UK forecasting that manufacturing output would fall by 55% in the second quarter, a record number of firms issuing profit warnings and Rolls-Royce announcing that 8,000 jobs would be lost.

As we noted above, May was the month when many threatened job losses became a reality – EasyJet were one company to announce that they would be cutting “thousands of jobs” – and you do wonder how many more will be lost as the furlough scheme winds down.

Boris Johnson has already hinted at a specific post-crisis jobs programme, similar to the Future Jobs Fund brought in after the 2008 financial crash. He spoke of a scheme that would create, “high class jobs for the country.” There were also suggestions over the weekend of Chancellor Rishi Sunak delivering an emergency Budget early in July as he looks to set the country on the path to recovery – and manage the huge Government borrowing that has been necessary.

There was, though, some good news for the UK. The economy ‘only’ contracted by 2% in the first quarter of the year and Nissan gave the North East a huge potential boost when it closed a factory in Spain, prompting widespread speculation that it would be moving production of two Renault SUV vehicles to Sunderland.

Almost half a million firms have applied for the ‘Bounce Back’ loans – with more than £14bn paid out so far – and as well as extending the furlough scheme, Rishi Sunak also announced a second payment to the 2m self-employed that have applied for grants.

What did the FTSE-100 index of leading shares make of