Investment Committee Market Update

Market Overview

Growing concerns around the Coronavirus have led to a sharp increase in volatility in markets over the last few weeks. Markets fell on Monday as Italy has quarantined 16 million people in Lombardy and the oil price fell sharply on a dispute between OPEC members. Equity markets are concerned about the impact of the virus on the global economy and on corporate earnings. 

Strong Government Response Expected

We expect that governments will respond to this: firstly, central banks will continue to cut interest rates and provide liquidity to markets to ensure that markets function properly. This morning, the Bank of England has announced an emergency cut in interest rates from 0.75% to 0.25% to shore up the economy in the wake of the coronavirus outbreak. Secondly, we believe that governments will accelerate their plans to carry out fiscal spending to kick start the economy. As a result, we anticipate that there will be an equally sharp bounce back in the economy and markets once the initial shock has passed. In the meantime, we think markets will remain volatile both to the up and the downside. 

Looking Ahead

Whilst the falls in markets are unsettling, equities will recover long before the news of the coronavirus moves off the front pages of newspapers. Valuations of many markets have improved, and some are looking increasingly attractive for long term investors.

If you have any questions, please do contact your adviser or the Chartered Financial Management (UK) Ltd office directly.

Posted by Chartered Financial Management (UK) Ltd on March 11th 2020

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