COVID-19 and market update

As you are no doubt aware coronavirus (COVID-19) is fast becoming seen as a global pandemic by citizens of many countries, though the World Health Organisation (WHO) is yet to classify it as such.

The spread of the virus in both the developed and developing world is, not surprisingly, a concern for all of us and for financial markets alike. To date, financial markets have experienced ongoing volatility with large swings - both positive and negative - highlighting the elevated level of uncertainty driven largely by news of the ongoing spread of the coronavirus. Although Governments and Health authorities continue to grapple with this issue, it still remains uncontained.

We appreciate that the escalation of infection rates and the news of the spread of the virus is alarming, and we continue to monitor the situation closely. We note the actions of the Reserve Bank in cutting the official cash rate by 0.25% to a historic low rate of 0.50%. And after an emergency meeting of the US Federal Reserve in the USA, their equivalent to our cash rate was cut by 0.50% to be in a range of 1.0% to 1.25%. It is clearly apparent that Governments and Central Banks are well aware of the potential economic and social consequences the spread of the coronavirus could have.

From an investment perspective, while the risk in the current environment remains elevated, we continue to maintain a positive outlook for Growth assets for the longer term, although we expect the news will likely get worse before it gets better in the near term. However, our current position is that it will improve.

If this communication or other news stories are causing you concern, or you have any questions, please feel free to contact us.