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Markets remain volatile as countries go into lockdown

Published April 2020

As more countries go into lockdown to control the spread of the coronavirus, we share this update from the ANZ Chief Investment Office (CIO) as they monitor March market movements.

Global share markets recorded one of their worst monthly declines this century as countries and businesses go into lockdown due to the Covid-19 pandemic.

In March, we saw global shares return -13.4% in hedged terms while they declined somewhat less in unhedged terms, down 8.3% as the Australian dollar fell.

Australian shares also suffered huge declines in March, down almost 21%. All sectors of the S&P/ASX 300 ended the month in the red. The Energy sector was the worst hit as Saudi Arabia flooded the market with cheap oil while demand fell significantly.

Traditional safe-haven assets were also hit by market volatility. Australian fixed income and international fixed income returned -0.2% and -1.7% respectively. Cash was the only asset class to have a positive return in March (albeit marginal).

On the other hand, we saw governments and central banks worldwide rush to offer support to the global economy, including:

  • The US Federal Reserve introduced unlimited quantitative easing
  • The US government signed into law the largest stimulus package in US history in late March, a $US2 trillion bill intended to rescue the coronavirus-battered economy.
  • The European Central Bank also launched a new, expanded program to buy up to 750 billion euros in government and private sector bonds in a bid to calm markets.

Here at home, the Australian government announced a total of $320 billion in financial support, including $45.5 billion program targeted at low income households, sole traders, small and medium enterprises and airlines.

The government also announced A$130 billion boost to businesses aimed to save jobs. The Reserve Bank of Australia lowered the cash rate twice in March to 0.25%.

At the time of this writing, the World Health Organisation (WHO) reported there were over 750,000 confirmed cases at the end of March, and over 36,000 deaths worldwide. This number continues to rise rapidly, with the US reporting more cases.

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