Gerald Fitzgerald’s Market Review March 2nd

LAST WEEK IN 30 SECONDS...

Markets hit correction territory last week as the spread of COVID19 dominated headlines, in turn shaking investor confidence and leading to equity markets having their worst week since 2008. Global equities fell by -11.8% over the week, with a significant movement downwards in high quality government bond yields as investors took shelter. The US 10-Year Treasury yield fell by 0.34% over the week, further pressurising the US Federal Reserve to make not one but multiple rate cuts in an effort to reassure markets and prevent a recession.

It was a strange week for other perceived “safe haven” assets with gold falling by 3.4%, due in part to investors raising cash by selling their gold positions.

THIS WEEK IN 30 SECONDS...

Markets have rebounded in early trading this week, albeit investor confidence remains guarded with updates on the spread of COVID19 dominating investor sentiment. Investors are also looking for signs of businesses returning to work in China with numerous production and distribution channels impacted globally by the effective shut down in Chinese business.

Elsewhere, Democratic Primaries Super Tuesday takes place this week to see who will be the Democratic nomination to go toe to toe with Donald Trump in November’s presidential election. Eurozone inflation updates are released on Tuesday with US non-manufacturing PMIs due for release on Wednesday.

EQUITY MARKETS GO UP AND DOWN

In what was a painful reminder that equity markets can down as well as up, last week saw a sharp indiscriminate sell-off across all sectors, in particular the energy sector. Whilst equity investors have benefitted from strong returns over the past decade, the question remains whether last week’s correction was merely a sneeze or the onset of a full-blown flu.