InvestNow News – 13th Mar 20 – ANZ Investments – Weekly Snapshot


International equity markets had one of their more volatile weeks with some indices recording daily gains and losses of more than 3% in four of the five trading days. In the US, all three major indices eked out gains for the week, but remain around 10% off their all-time highs made in late February. Down under, the NZX 50 finished the week higher, while the ASX 200 ended the week in the red.

The pickup in volatility saw government bonds rally, pushing yields lower. The US 10-year government bond ended the week below 0.8%, while in New Zealand, the 10-year equivalent fell below 1%.

What’s happening in markets

Once again, investors were focused on the still-spreading coronavirus, which has now infected more than 100,000 people and killed around 3,500. Cases have now been confirmed in more than 80 countries.

On Tuesday, in a response to the growing economic impact of the coronavirus, the Federal Reserve cut interest rates by 50 basis points, the first emergency cut since 2008.

“The virus and the measures that are being taken to contain it will surely weigh on economic activity for some time, both here and abroad. We don’t think we have all the answers. But we do believe that our action will provide a meaningful boost to the economy.” – Fed Chair Jerome Powell

Elsewhere, the Reserve Bank of Australia cut rates 25 basis points and the Bank of Canada cut 50 basis points.

The surge in volatility saw the VIX Index – a broad measure of equity volatility – trade sharply higher. Adding to volatility was the 10% fall in oil on Friday after OPEC production talks fell through with Russia unable to agree on production cuts.

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