Key Data for the Week
Key economic data released this week:
The Australian sharemarket was down 9.7% as the coronavirus epidemic worsened. Market declines were broad based, with most sectors falling at least 10%.
Energy was the weakest performer; Oil Search lost 19.8%, Santos fell 17.7% and Woodside Petroleum slipped 14.4%.
The big four banks all closed sharply lower amid the dramatic fall in bond yields and ahead of a looming RBA Quantitative Easing announcement. ANZ slumped 12.5%, NAB fell 12.4%, Westpac lost 11.8% and Commonwealth Bank lowered 10.0%.
CSL fell 10.4%, while Cochlear dropped 19.3% after the company withdrew FY20 earnings guidance due to the coronavirus outbreak but said it is confident it can meet future cash requirements.
Consumer Staples were relatively stronger; Woolworths weakened 2.0% and Coles lost 1.1%. The Telecommunications sector was also weaker, however, Telstra bucked the trend to rise 1.8%.
The Australian futures market points to a 4.3% fall today, driven by weaker international markets.
European sharemarkets were weaker on Monday, with the broad based STOXX Europe 600 down 4.9%. Airlines continued to come under pressure; International Airlines Group slumped 27.0%, EasyJet lost 22.9% and Ryanair fell 19.8%.
US sharemarkets fell overnight, after the Fed cut rates by 100bps to 0-0.25% on Sunday. Apple lost 12.9% after the company announced it will close all stores outside China until 27 March. Biotechnology company Moderna, rose 24.4%, after the company announced the first coronavirus vaccine trial had begun, with 45 patients set to receive different doses of shots. However, the company noted it could take 12-18 months to fully validate any potential vaccine.
By the close of trade, the Dow Jones fell 12.9%, the NASDAQ lost 12.3% and S&P 500 weakened 12.0%.
It’s not the sort of record investors want to be a part of, particularly when it refers to the level of fear in the market, but the Volatility Index (VIX), or ‘fear index’ as it’s often referred to, is fast approaching its highest level on record.
The GFC is the last time the VIX had such a run. On the 24th of October 2008, the index hit 89.53 and last night after jumping 42.99%, hit an intraday high of 83.56.
Last night US stocks were falling so fast they hit a trading pause for the third time in a week.
This follows last week, where the S&P 500 recorded its biggest plunge since the crash of October 1987.
It seems a long way from the benign investing days during 2017, when the VIX hardly got above 12.
The GFC seems a ripple in the water compared to this current market crash.
The big question is whether the VIX hits a new record or not.
It seems likely.
Should you wish to discuss this or any other investment related matter, please contact your Investment Services Team on (02) 4928 8500.
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