Quick Covid Update 24th June
The cases in the UK driven by the Delta variant continue to rise exponentially as can be seen from the graph below. The point at which the rate slows down is unknown at present but an educated guess could be worked out. Taking into account the previous waves, level of adult vaccinations in the UK and the increased transmissibility of the Delta variant in younger people, it is likely that the growth is driven in the younger population which is how it is side-stepping the existing precautions and immunity in the population. Schools are due to break up in 3 weeks which should put in place a fire-break in the spread, vaccinations continue and the virus progression between now and then will also make it harder for the growth to continue. For the above reasons, the latest the case rate should be falling is mid July.
That was the UK though, the rest of the world potentially as still to deal with the Delta variant. In the US the Covid case rate will likely be increasing within 3 weeks do to the Delta variant doubling every 2 weeks. Shortly, it will overtake the incumbent variants an overall cases will be rising.
How the markets will take a general increase in Covid cases in the US is anyone’s guess but it is something to be aware of. It will probably not result in a large increase in deaths but the added uncertainty about the future and opening up (and also for the virus to keep winning by mutating) is bound to have some effect.
It could be that the activity of the markets between now and then dictate the eventual reaction. Currently we have continued confidence in the old economy stocks and the tech stocks are starting to rise after a few poor months. If we get a very fast run up in stocks and energy it could set up the conditions for a fast pull back.
