InvestNow News – 27th Mar – Russell Investments – Global Market Outlook: Q2 Update – Cycle further interrupted
” … Our central case is that global growth begins to recover in the second half of the year as the virus outbreak fades … “ – Andrew Pease, Global Head of Investment Strategy
“Events, dear boy, events” was how former British prime minister Harold Macmillan described the unpredictability of politics, and the same can be said of investment strategy. As of mid-Febuary, our expectation for a global mini-cycle recovery was on track. Green shoots were apparent in manufacturing indicators and a ‘phase1’ trade deal had been agreed between the U.S. and China.
By mid-March, however, events had taken over. The virus outbreak has quickly progressed to an economic shock as governments across the globe enact strict containment policies. Borders have been closed, and schools and universities shut down. Markets are panicked by uncertainty over the duration of the virus threat and the extent of further containment measures. This has been compounded by fears that monetary policy has reached its limits with almost all central banks at the zero-lower bound1. We expect that more aggressive fiscal stimulus measures will offset any shortfall in monetary firepower. The main uncertainty is the duration and depth of the virus-induced recession. Our central case is that global growth begins to recover in the second half of the year as the virus outbreak fades, but expert medical opinions on the longevity of the virus threat vary.