It was another tumultuous week in global stock markets. The S&P 500, DAX[1] and Nikkei 225[2] all suffered another dismal 5-day performance that last matched declines witnessed during the 2008 financial crisis. The coronavirus outbreak and stringent measures governments are taking to promote social isolation are placing global growth increasingly at risk
Demand for preserving capital benefited the haven-linked US Dollar[3] as it even outpaced the anti-risk Japanese Yen[4]. EUR/USD[5], GBP/USD[6] and AUD/USD[7] fell. Sentiment-linked crude oil prices[8] dropped as WTI fell almost 30% this past week. Gold prices[9] declined once more as the yellow metal struggled to match the liquidity that the Greenback offers as the world’s reserve currency.
Monetary policy may continue heading into uncharted territory after a week of coordinated global moves. Central banks such as the Fed, ECB, BoE, RBA and RBNZ kept slashing what little was left in lowering rates in the first place. Most took unconventional policy measures to help the flow of capital in these uncertain times.
It is unclear if equities have found a bottom with COVID-19 spreading faster outside of China, particularly in Europe and the United States creeping upward. Unemployment claims in the world’s largest economy surged at their fastest pace since 2012[10]. More dismal readings may come in the weeks and perhaps months ahead with states and counties attempting to curb travel.
All eyes in the week ahead turn to more fiscal measures, particularly as Congress debates stimulus checks. The G-7 Foreign Ministers Summit will also be eyed for perhaps more coordinated commitment. Preliminary gauges of U.S. business activity for March will show an idea of
