The Markets
Global financial markets experienced heightened volatility over recent months following the rise of COVID-19. March was a tough month for the global investment markets, with market fluctuations reaching a scale not seen since the Global Financial Crisis in 2008. The majority of developed economies implemented some form of nation-wide lockdown, with only “essential” services operating. Central banks and governments were quick to act and implemented a number of monetary and fiscal policy initiatives to support both financial markets and domestic households during lockdowns.
Nearly all asset classes were punished in March. Cash was indeed king as even “safe haven” assets such as higher grade bonds, gold and the Japanese Yen provided limited protection. In an unfortunate series of events, risk assets fell abruptly as COVID-19 related fears mixed with the start of an oil price war (ignited after Saudi Arabia and Russia increased oil supply following a collapse in OPEC negotiations). The price of oil halved over the month, pulling down the value of broader commodity indices.
The worst affected sectors of the share markets were generally energy and real estate. Meanwhile, the better places to be positioned were in the consumer staples (such as Colgate, Palmolive, Walmart, Coca-Cola, and Mondelez International), healthcare and I.T. sectors.
Financial markets experienced a strong positive rebound in April, despite COVID-19 continuing to spread, with confirmed cases surpassing three million at month-end. US share markets had their best performance since 1987 as the prospect of economies gradually re-opening (after being in lockdown) sustained the rally in growth assets.
The US share market rally continued into May, with the S&P 500 Index back to where it was at the start of 2020, effectively erasing one of the most tumultuous periods in recent history.
Global share markets extended their remarkable quarterly gains throughout June, as FAANG (Facebook, Amazon, Apple, Netflix, and Google) stocks continued their recent price surge. Oil also had a positive month, finishing up +16.5% for the period as economic activity started to pick up. Gold markets experienced continued inflows during June, reaching prices not seen since the February 2012. Central banks around the world maintained supportive monetary policies to soften the economic impacts inflicted by COVID-19.
Cases of COVID-19 topped 10 million around the world in June, with over 500,000 deaths at month-end. The rate of new cases continued to increase in many parts of the world, and although the number of new cases started to slow in the US in May, the trend sharply reversed in June across Southern and Western States, while Brazil, Russia, and India also saw cases rise rapidly.
Despite the ongoing effects of COVID-19 on economies around the globe, developed equity markets (that includes the US, UK, Canada, Australia and New Zealand) were up +2.4% in local currency terms. Economic data displayed gradual signs of improvement, as global governments and central banks continued to provide fiscal and monetary support that offset a lot of the real economic impact.
Trans-Tasman shares had another positive month in June, with New Zealand and Australian share markets up by +5.3% and +2.6% respectively. Locally, a successful transition to Alert Level 1, combined with continued low numbers of new virus cases has held up investor confidence. A surge in new virus cases in Victoria has recently weighed on Australian markets.
Nearly all asset classes were punished in March. Cash was indeed king as even “safe haven” assets such as higher grade bonds, gold and the Japanese Yen provided limited protection. In an unfortunate series of events, risk assets fell abruptly as COVID-19 related fears mixed with the start of an oil price war (ignited after Saudi Arabia and Russia increased oil supply following a collapse in OPEC negotiations). The price of oil halved over the month, pulling down the value of broader commodity indices.
The worst affected sectors of the share markets were generally energy and real estate. Meanwhile, the better places to be positioned were in the consumer staples (such as Colgate, Palmolive, Walmart, Coca-Cola, and Mondelez International), healthcare and I.T. sectors.
Financial markets experienced a strong positive rebound in April, despite COVID-19 continuing to spread, with confirmed cases surpassing three million at month-end. US share markets had their best performance since 1987 as the prospect of economies gradually re-opening (after being in lockdown) sustained the rally in growth assets.
The US share market rally continued into May, with the S&P 500 Index back to where it was at the start of 2020, effectively erasing one of the most tumultuous periods in recent history.
Global share markets extended their remarkable quarterly gains throughout June, as FAANG (Facebook, Amazon, Apple, Netflix, and Google) stocks continued their recent price surge. Oil also had a positive month, finishing up +16.5% for the period as economic activity started to pick up. Gold markets experienced continued inflows during June, reaching prices not seen since the February 2012. Central banks around the world maintained supportive monetary policies to soften the economic impacts inflicted by COVID-19.
Cases of COVID-19 topped 10 million around the world in June, with over 500,000 deaths at month-end. The rate of new cases continued to increase in many parts of the world, and although the number of new cases started to slow in the US in May, the trend sharply reversed in June across Southern and Western States, while Brazil, Russia, and India also saw cases rise rapidly.
Despite the ongoing effects of COVID-19 on economies around the globe, developed equity markets (that includes the US, UK, Canada, Australia and New Zealand) were up +2.4% in local currency terms. Economic data displayed gradual signs of improvement, as global governments and central banks continued to provide fiscal and monetary support that offset a lot of the real economic impact.
Trans-Tasman shares had another positive month in June, with New Zealand and Australian share markets up by +5.3% and +2.6% respectively. Locally, a successful transition to Alert Level 1, combined with continued low numbers of new virus cases has held up investor confidence. A surge in new virus cases in Victoria has recently weighed on Australian markets.
This information has been prepared by Mercer (N.Z.) Limited for general information only. The information does not take into account your personal objectives, financial situation or needs.This information has been prepared by Mercer (N.Z.) Limited for general information only. The information does not take into account your personal objectives, financial situation or needs.
3 August 2020