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Weekly Feed5 Mins Read

Kristal Weekly Feed I 09 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:

  • It was a roller-coaster week for stocks around the globe as efforts to boost the investor sentiment by international economic institutions like the World Bank and IMF failed. Concerns surrounding the economic impact of the spread of Covid-19 are growing every day.
  • The U.S. Federal Reserve slashed rates by 0.5% for the first time since 2008 as an emergency rate cut to tackle the growing economic threat of the virus.
  • As investors flocked to safer assets, the yield of the 10-year U.S. Treasury note dropped below 1.00% for the first time.
  • Gold prices were on course to reaching their biggest weekly gain in 11 years.

Tracking the 2019-n-CoV

COVID-19 now has 102,132 confirmed cases around the globe and the death toll is at 3488. Countries with confirmed cases of COVID-19 include:

COVID-19-cases-week-of-02-09-March
COVID 19 global cases (02-08 March) | Source: ECDC, Europa

 


Market Update

United States:

The week started with a bang in the US markets as investors were hopeful of the central bank will ease the monetary policies and increase liquidity to counter the impact of coronavirus over the economy. All three major benchmarks gained more than four percent.

Europe:

The sentiment in the US was replicated in the European markets too as investors awaited a response in monetary policies to mitigate the impact of the virus on the global economy. Most major indices closed in the green.

Asia-Pacific:

Despite an uninspiring Chinese manufacturing data released over the weekend, major indices in the Asia-Pacific region made an attempt to bounce back on Monday after the huge losses last week.

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

United States

Last week was one of the worst weeks for the US markets in a long time. On Monday, however, investors latched on to the hope that the central bank will introduce new monetary policies and increase liquidity to fight the economic threat of the virus. This kept the market sentiment optimistic and all three major indices gained more than 4%.

U.S.-Markets-week-of-02-09-March-2020
U.S. market performance (week of 02-06 March 2020)

Although the US Federal Reserve announced a rate cut on Tuesday, it failed to curb the spate of selling as the concern about the economic impact of the pandemic gripped investors across the US. Wednesday was a better day for the US markets with the US Congress and major global economic institutions like the IMF and World Bank deciding to release funds to minimize the impact of the virus on the global economy. This helped strengthen investor confidence.

However, the optimism didn’t last long and Thursday saw a major selling spree with benchmarks experiencing a huge fall. The week ended with most indices failing to make up for the losses on Thursday as the fear of the economic impact of the virus intensified.

Europe

European investors echoed the sentiment of their US counterparts as markets closed slightly higher on the back of the hope that there will be a global monetary policy response to curb the economic damage caused by the virus. Interestingly, while the US markets didn’t respond favorably to the Fed rate cut, the European markets saw it as an effort to control the situation and closed in the green. This sentiment was carried into Wednesday as European investors eagerly awaited similar monetary policy changes from major central banks. Most indices closed higher.

Europe market performance (week of 02-06 March 2020)
Europe market performance (week of 02-06 March 2020)

However, the optimism didn’t last long in Europe either. Thursday and Friday saw most indices falling sharply as fears of the economic damage from the spread of the coronavirus further intensified.

Asia Pacific

Asia-Pacific investors echoed the sentiments of the US and European investors and started the week on a positive note. Despite an uninspiring Chinese manufacturing data released over the weekend, most major indices closed higher on Monday with the Shanghai Composite leading the pack (+3.15%). This sentiment continued into Tuesday as investors remained hopeful that major central banks would take steps to mitigate the economic damage caused by the virus.

APAC-market-performance-week-of-02-06-March-2020
APAC-market-performance-week-of-02-06-March-2020

Unlike the US markets, Asia-Pacific markets took positively to the emergency rate cut announced by the US Federal Reserve. On Wednesday, most Asia-Pacific stocks closed higher. This optimism was further boosted when the IMF announced a $50 billion aid package to combat the impact of the virus. Most markets closed higher on Thursday too. However, all these steps failed to keep investors interested for long and on Friday, almost all major indices closed lower as investors went on a selling spree.

Heading into next week…

While most markets still appear to be correcting themselves, a subdued fear of the start of a bull phase is also playing heavily on investors’ minds. The promising trend that we can see in the week that went by was that most markets made a valiant attempt to remain positive and reduce the economic impact of the virus with support from central banks and global economic bodies. In the coming weeks, we expect markets to remain volatile and urge investors to remain vigilant and look for updates that worsen or improve the situation.

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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