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Weekly Feed5 Mins Read

Kristal Weekly Feed I 02 March 2020

With a busy schedule, it can get difficult to understand and analyze major events around the globe and how they affect your investments. In our weekly market update, we help you slice and dice the latest news updates to make informed investment decisions.


Headlines this week:

  • Markets around the globe suffered heavy losses as the COVID-19 spread beyond China to the European and American countries. More than 30 countries outside China are now affected by COVID-19 with the number growing every day.
  • Oil prices experienced their steepest weekly fall since 2008 as the spread of the coronavirus fuelled fears of slowing global demand.
  • Samsung Electronics kept its mobile device factory in South Korea closed on Feb 22nd and 23rd as the factory announced one confirmed case of coronavirus.
  • Most markets record a week of historical losses – the worst since the financial crisis of 2008.

Tracking the 2019-n-CoV

COVID-19 now has 85,203 confirmed cases around the globe and the death toll is at 2921. Countries with confirmed cases of  include:

Worldwide-Covid-19-cases
Source: ecdc.europa.eu/en/geographical-distribution-2019-ncov-cases

Market Update

United States:

The severity of the outbreak of COVID-19 routed Wall Street on Monday with all three major indices tumbling more than 3%. With investors turning towards safer havens, Gold climbed 2.8% on Monday reaching its highest level in seven years.

Europe:

European markets started the week with major losses with airline stocks being the worst hit. The travel and leisure sector fell over 6% on Monday.

Asia-Pacific:

Almost all markets in the Asia-Pacific region closed in the red on Monday. Skepticism regarding the spread of the virus gave way to fear as South Korea raised its virus alert level to the highest level on Monday.

Let’s take a look at how the global markets performed during the week:

United States

The US markets started the week with news regarding the spread of COVID-19 across European and American countries. Most stocks experienced severe losses and all three major indices fell more than 3%. The market sentiment was evident from the fact that Gold – a safe haven for investors – climbed 2.8% and reached its highest level in seven years. The fear regarding the spread of the virus led to a further fall on Tuesday.

U.S. market performance - week of 24th February 2020

In the first two days of the week, the DOW experienced its worst fall since February 2018, S&P 500 had its worst decline since August 2015, and Nasdaq Composite had the worst two consecutive days since June 2016. While the markets tried to make a recovery on Wednesday, fear outweighed facts and DOW as well as S&P 500 closed in the red. Nasdaq Composite managed to gain 0.17%. Thursday was the worst day of the week for US stocks as all three major indices plummeted more than 4%.

The S&P 500 and Nasdaq Composite had the biggest single-day drop since August 2011. The week ended with most US stocks tumbling for the seventh consecutive day. The DOW recorded a weekly loss of 12% while the S&P 500 dropped 11%.

Europe

Like the rest of the world, Europe had a bad start to the week with the pan-European Stoxx 600 tumbling 3.79% led by the airline and leisure sector which fell over 6%. As news about the spread of COVID-19 in Italy hit the markets, the investor sentiment was skeptical at best.

European market performance - week of 24th February 2020

On Tuesday, the World Health Organization (WHO) sent a mission to Italy to assess the situation. Investors stayed watchful as most markets closed in the red. Wednesday saw a slight rebound following the extensive sell-offs earlier this week. While the pan-European Stoxx 600 closed slightly higher, the FTSE 100 gained 0.35%. The recovery on Wednesday was short-lived and most markets closed in the red on Thursday. Estonia and Denmark reported their first confirmed cases of coronavirus.

Both Stoxx 600 and FTSE 100 closed more than 3% lower. The historic week of losses continued as most markets closed sharply lower on Friday too. The spread of COVID-19 beyond China led to the nosedive of the European markets this week.

Asia Pacific

This week spared no market as the fear of the spread of COVID-19 dictated market sentiment around the globe. Almost all markets in the Asia-Pacific region fell on Monday. On February 22nd, Samsung Electronics had announced that the company had a confirmed case of COVID-19 at its mobile device factory in South Korea and had kept the facility closed until Monday. South Korean government gave the virus the ‘highest alert level’.

APAC-market-performance-week-of-24th-February-2020

As the Japanese markets reopened after a holiday on Monday, stocks plummeted more than 3% leading the losses in the region. While some markets attempted a recovery, the overall market sentiment was fearful considering the spread of the virus beyond China. Thailand’s SET dropped more than 5% on Wednesday after news about some citizens concealing the information of the infection while at a hospital raised an alarm among people. Overall, most markets closed in the red on Wednesday. While the Thailand markets made some recovery on Thursday, Japan led the losses in the region with its markets falling more than 2%.

Whenever the market sentiment is fearful, most investors tend to sell on Friday. This Friday was no different as most markets in the region declined sharply.

Heading into next week…

With most markets entering the infamous ‘correction territory’ fears regarding the end of the long-standing bull-run is playing on most investors’ minds. Although statistically, the odds of a market correction indicating the start of a bear market are low, the current market sentiment is pessimistic due to the potential impact of COVID-19 on the global economy. This is also evident in the drop in oil prices and the seven-year high gold prices.

As the virus spreads across Europe and the Americas, any positive earnings or financial reports are not likely to boost the market sentiment to a great degree. Investors will do well to continue remaining watchful and look for updates that can reverse this trend. If the markets fall further and enter the bear phase, then investors might have to realign their investment strategies accordingly.

Disclaimer

The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

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