Equity markets have fallen dramatically in response to these events and for the most part, indiscriminately. Some sectors have been hit harder than others such as energy and smaller companies which have led the sell-offs, as well as those companies with complex supply chains and businesses reliant on discretionary consumer spending.
It has become clear that the impact of the virus is likely to be with us at least for the medium term and in response, consumers are likely to save rather than spend in the face of adversity and uncertainty. The concern for investors is that this develops from a health crisis to a liquidity crisis and beyond.
Markets fear uncertainty and the global economic impact and the threat of recession is an unknown. However, what is becoming clearer is that we are beginning to witness a sustained and coordinated response from governments and central banks, such as the Bank of England and the Federal Reserve in the US with fiscal packages and a cut in interest rates. We anticipate that this overtime should support markets.
What can you do now?
Remain calm. Whilst this current situation is undoubtedly worrying over the short term, we continue to remain committed to investing for long-term growth.
We would urge caution and restraint in these volatile conditions and do not recommend a change to investment strategies as a direct response to recent events.
Portfolios are invested in line with clients’ risk profiles and time horizons and as such, we recommend remaining invested in accordance with this, rather than to sell out, realising losses.
Are there opportunities?
Undoubtedly. Markets are between 30% and 40% lower than where they were two weeks ago. Many investors are now adding new monies to their portfolios in order to capture the recovery when it comes. This is though of course not without risk.
Find out more about global stock market movements & opportunities.
What next? Get in touch! We are here to help and a call to review your finances may make a huge difference.