The economic turmoil is already affecting businesses, employees, and economic growth globally. According to the International Finance Corporation, the coronavirus pandemic has already cost thousands of lives and forced families to make drastic changes to their way of life. It’s also imposing another kind of human toll, by putting at risk the jobs and livelihoods of people around the world.
The damage is already evident. With public events getting cancelled and people encouraged to avoid crowds, the travel and tourism industries are seeing a steep drop in demand. Manufacturers connected to global supply chains are experiencing severe disruptions. Some companies are already facing a cash crunch, forcing them to scale back operations and lay off employees. The stress is especially great on micro, small, and medium-size enterprises, which often have less capital for their day-to-day operations than bigger companies, and are therefore highly vulnerable to global shocks. The OECD projects that global growth this year will be slower than expected, even if the outbreak is contained, and that world output may contract in the first quarter.
Dramatic action from policymakers failed to bring much calm to financial markets on Thursday, with stocks in Asia sinking while European and US indexes were mixed, according to CNN’s “the US dollar plows ahead as global stock markets remain volatile” news report on 19th March 2020. US stocks were mixed in morning trading. The Dow and S&P 500 posted mild losses, while the Nasdaq was in positive territory.
In Europe, London’s FTSE 100 ticked up 0.5% after the Bank of England announced another emergency interest rate cut. The European Central Bank (ECB) stepped up its response to the coronavirus outbreak on Wednesday, launching the Pandemic Emergency Purchase Programme (PEPP) with an overall envelope of €750 billion, a new temporary asset purchase programme of private and public sector securities, to counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the outbreak and escalating diffusion of the COVID-19 coronavirus. However, the ECB’s efforts failed to move the needle elsewhere in Europe, where Germany’s DAX and France’s CAC 40 moved between small gains and losses.
Those moves followed a rough trading session for stocks in Asia Pacific. The Korea Exchange briefly suspended trading in Seoul after markets there plummeted, tripping a circuit breaker. The benchmark Kospi dropped 8.4%. The Kospi was the region’s worst performer, but equities elsewhere were down too. Australia’s S&P/ASX 200 dropped 3.4%. Hong Kong’s Hang Seng Index fell 2.6%, while China’s Shanghai Composite slid 1%. Japan’s Nikkei 225 fell 1%. The Bank of Japan earlier offered to buy 1 trillion yen worth of Japanese government bonds in an unscheduled move.
In contrast to most asset classes, forex trading became the top performer. The US dollar jumped to a record high against the Mexican peso. The greenback also rose against the Japanese yen – a traditional safe haven currency – to its highest level since February. Currencies elsewhere in Asia weakened on 19th March 2020. At TLC, our percentage allocation management module (Pamm) funds have been achieving the following results in March: Pamm 1 (8.1%) and Pamm 2 (7%). Given the challenges posed in the global financial markets, making money or even preserving capital is considered impressive during these times.
Various developments that will happen in quick succession are likely to contribute to volatility in major financial markets. This is the time when there are plentiful investment opportunities for investors to invest and grow their wealth. At TLC, we track developments in global financial markets to ensure we can achieve good financial returns on our clients’ investments. We are committed to creating opportunities for you to obtain great profits. Let’s embrace the opportunities ahead of us! Now is the best time to invest for a brighter future! Prepare for better times, by letting us, TLC, to become your partner that can guide your financial decisions in years to come.