Lest we forget
It was 80 years ago today, that the evacuation of Dunkirk started and despite almost impossible odds the greatest evacuation in history succeeded.
My wife’s grandad was amongst the men stranded on the beaches where the Luftwaffe attacked whenever the weather allowed. When she was growing up he would share funny stories about the war, in particular the time they sold bags of ‘special’ sand to the locals in what was then Palestine but all he would say ever about Dunkirk was that they survived on cigarettes and their wits. He was rescued after 6 days on the beaches by a small tug boat, out of Dunbar, Scotland, that joined the call to action when the evacuation was announced to the British public. Many privately owned boats started arriving at Dunkirk to ferry the troops to safety. This flotilla of small vessels famously became known as the ‘Little Ships’.
The British Expeditionary Force (BEF), after the phoney war of October 1939 to April 1940 was sent to defend France. Germany invaded Belgium, the Netherlands and France on 10 May 1940. Three panzer corps (motorised divisions) attacked through the Ardennes and drove northwest to the English Channel in a move that became known as a blitzkrieg. By 21 May, just 11 days later, German forces had trapped the BEF, the remains of the Belgian forces, and three French field armies along the northern coast of France.
The BEF commander General Viscount Gort immediately saw evacuation across the Channel as the best course of action, and began planning a withdrawal to Dunkirk, the closest good port. London however demanded more action so Gort launched another attack. This attack however lacked the necessary armour and German tanks continued past Boulogne and Calais to cross the canal defence line close to Dunkirk, the only port left for an Allied withdrawal from Europe. The Allied armies were being encircled. On 24 May, just as German tanks were expected to drive into Dunkirk, Hitler gave the surprise order to withdraw back.
The mass evacuation of Dunkirk started 2 days later on 26 May and gained an even greater urgency the next day, when Hitler rescinded his orders and German tanks again advanced on Dunkirk. Heavy bombing had destroyed Dunkirk’s harbour, and there were hundreds of thousands of men on the beach, hoping to be rescued. By 4 June, when the operation ended a total of 536,000 Allied troops evacuated to Great Britain (over 330,000 of these troops were at Dunkirk) although thousands were left behind facing years in prison camps or worse.
The contribution of the little ships gave rise to the term ‘Dunkirk spirit’.
It’s that spirit that’s being called upon just now as we head towards the next stages of the current COVID-19 situation. The UK Prime Minister has announced the re-opening of the economy over the next few weeks with markets in open spaces, car showrooms and non essential retails shops given permission to re-start and while the devolved countries are working to a different timeline they are expected to follow suit in due course. This signal of intent has had a positive impact on the FTSE 100 and FTSE 250 this morning which is no surprise as markets look forward and quickly forget the past.
Of course the expected CBI Retail Sales figures for May, due out today, will dampen this positivity but the signal that Britain is starting to climb out from behind the virus is seen as positive.
It’s been a similar story in Europe with European stocks opening higher on the economic recovery hopes but it’s very early days and fears of a second wave continue. In the US, stock futures indicate a powerful opening after the holiday weekend which continue to be driven mainly by the vaccine progress news but aided by signs that the global economies are showing signs of life.
In Asia markets are trading higher despite the growing concerns over the US / China relationship. Japanese Prime Minister Abe will lift the state of emergency for the pandemic in Tokyo and 4 other prefectures. In China shares rose on Monday after an awful day on Friday, following the announcement of a new national security law which if implemented will give Beijing more control over Hong Kong which incited further pro-democracy protests. The announcement drew criticism from the US with the White House national security adviser saying that if implemented the US government will likely impose sanctions on China. This saw the Chinese Foreign Minister respond by stating the US were taking bilateral relations ‘hostage’ and pushing the two economic powerhouses to the brink of a ‘new cold war.
It’s the difficult relationship between US and China that shaped the market for much of last year and there is no sign of this abating, indeed it’s likely to only increase in difficulty which probably means increased volatility ahead. This posturing is yet another sign that the world is returning to normal, throughout the pandemic the markets have continued to be impacted and react to aspects such as US/China relations and the global oil price.
While the pandemic is by no means behind us and is still a cause for considerable concern it is perversely re-assuring that the market is reacting as we have come to expect.