1Q 2020 Market and Economic Overview

The first quarter of 2020 was dominated by COVID-19 and the lockdowns imposed in response. The report described the fastest bear market in history, and also the shortest if the 20% rebound in the Dow Jones Index in the last full week of March was counted. Over the quarter the MSCI World Equity Index fell 21.74%. US equities fell 20.00%, euro area equities 25.54%, German equities 25.26%, UK equities 24.80%, Japanese equities 20.04%, Swiss equities 12.20% and Chinese equities 10.02%.

The report noted that China had gone into lockdown for a month and that containment measures in China and South Korea were severe and appeared largely successful, while Europe and North America were slower to impose restrictions. Central banks again cut interest rates to zero and resumed quantitative easing, and the combined monetary and fiscal response was described as unprecedented in size. Fiscal stimulus announced in Europe and the US was running at upwards of 10% of GDP. In the US, the Federal Reserve funded a special purpose vehicle owned by the US Treasury that bought corporate bonds.

Oil prices fell sharply after Saudi Arabia and Russia fell out within the OPEC+ group and each threatened to raise production while demand was already falling. The report cited a halving of the oil price and a loss of demand of the order of 20 million barrels per day as a result of the lockdowns. WTI crude fell 67.16% over the quarter to USD 20.05. Gold rose 3.56% to USD 1,571.31. In currencies, sterling fell 6.34% against the US dollar to 1.24 and the euro fell 1.61% against the dollar to 1.10.

The report also discussed the potential consequences of the stimulus for inflation and government debt, working practices such as teleworking, and the outlook for oil production, including the effect of low prices on higher-cost producers.

Important information: This snapshot summarises MWC Group's market commentary for the period shown and is provided for general information only. It is not investment, tax or legal advice, a personal recommendation, or an offer or solicitation to buy or sell any investment, and it does not take account of your personal circumstances. Views and figures reflect conditions at the date of publication and may since have changed. Past performance is not a reliable indicator of future results. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Exchange-rate movements can affect returns. Market data comes from third-party sources believed to be reliable, but its accuracy cannot be guaranteed. Please seek personal advice before making any investment decision. Issued by Manentia Wealth Consulting Group Limited (C80087), licensed by the Malta Financial Services Authority.