30 March 2020 - Investments and Market Update 

A brief market overview and some positive news

Last week we saw equity markets end up, against the start of the week. This was welcomed as a break in the downturn of the previous weeks. With GBP strengthening against most G10 currencies it created a headwind to the returns of global assets
 
The recently passed U.S. Coronavirus stimulus bill and this month’s Research Investment Committee Report from Bank of America Merrill Lynch helped to give investors assurance governments are stepping up to protect the economy. China have also given us comfort as their economy is starting to slowly get back to work and reporting very few new cases of the virus.
 
We will continue to update you on your investment portfolios and would encourage you to contact you Adviser directly for more information relating to your specific investments. While last week was positive, we would again remind you investments will continue to see short term volatility and are designed through their diversification to provide returns over the medium to long term.  

A word of warning: Look out for Fraudsters

Experts from the National Cyber Security Centre have revealed a range of attacks being perpetrated online as cyber criminals seek to exploit COVID-19. Techniques seen since the start of the year include bogus emails with links claiming to have important updates, which when clicked, lead to devices being infected.  These ‘phishing’ attempts have been seen in several countries
 
The NCSC, a part of Government Central Head Quarters (GCHQ) created to keep the UK safe online, is urging businesses and the public to consult its online guidance, including how to spot and deal with suspicious emails as well as mitigate and defend against malware and ransomware.

Some frequently asked questions

We speak to market experts every day and thought it would be insightful to share some of their thoughts to the questions we are most commonly asked. WHAT DO YOU BELIEVE WILL BE THE KEY ‘TURNING POINTS’ FOR MARKETS WHERE THEY MIGHT START TO MAKE A RECOVERY?   First and foremost, the signals that markets are looking for are cohesive and collaborative action plans from central banks and governments across the globe on how they will help to limit the economic impact caused by the widespread shutdown. Monetary and fiscal policy makers have moved very rapidly and in very large size, all of which should help markets to find their support level.   Second, the markets will be looking for signs that the spread of the virus is slowing significantly and businesses are starting to return to work. We are already starting to see this in China, with minimal new cases being confirmed and some industries returning to work as normal. These ‘green shoots’ of recovery are what we will need to see across Europe and the US before a reasonable market turnaround is likely to begin.   We are of course confident that this time will come and, once it does, we expect a relatively quick reaction from markets. While we do not believe that markets will rally immediately back to their previous highs, it is likely we will see a move upwards as markets can more accurately assess the impact of the virus and investors start to look beyond the crisis and into the future.      WHAT IS BEING DONE TO TRY AND HELP ECONOMIES ACROSS THE WORLD AND HOW WILL THIS IMPACT INVESTMENT PORTFOLIOS?   Central banks and governments are pouring unprecedented amounts into global economies through a combination of both fiscal and monetary stimulus. What this effectively means is tax breaks for individuals and businesses, interest-free loans, and even assistance with paying staff wages to try and reduce the risk of mass redundancies and increasing unemployment. The perception is that the UK’s response so far has been broadly positive and in some cases has exceeded expectations.   However, the response from the US has fallen short of market expectations, causing significant market swings over the past week. Being the world’s largest economy, markets will continue to pay close attention to actions in the region and we expect this to continue to be the predominant market driver in the coming weeks. The response from central banks and governments is intended to stop further stock market falls and should also help other assets within portfolios, such as fixed income and alternatives.   WHAT DO YOU THINK WILL HAPPEN OVER THE COMING WEEKS?   In the coming weeks, we expect markets to begin to adapt to the new normal. Panic selling should ease as more information becomes available. Key questions, relating to how long the economic shutdown is going to persist, what the reinfection risk looks like, and if any medical breakthroughs will be made to deal with the underlying problem, should start to be answered. Indeed, a number of economies ahead of Europe and the US in terms of the spread of the infection, So lay out a roadmap that Europe and the US can follow.   As this happens, we believe the market can start to find its feet again and much more reasonable assessments can be made about the valuations of businesses. If 2008 is anything to go by, markets move from being too relaxed about the major problems to then significantly over-estimating their long-term impact. We know it is difficult to maintain perspective while in the eye of the storm, but we are focussed on helping you achieve your longer-term investment goals.  We reiterate our commitment to this and our investment partners are working hard to retain the best chance of your benefitting from the recovery when it eventually comes.