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Trying to make sense of the markets during COVID-19?

2 April 2020 | 5 min read
The start of the new year has been unexpected to say the least. We're here to break down the effect of the markets around the world.

The start of the new year has been unexpected to say the least. With social distancing measures in place, tens of thousands of Australians forced out of work and the threat of a health crisis on our doorstep, it’s safe to say 2020 is shaping up to be like no other.

The uncertainty has been felt across the globe and our markets haven’t been immune to the effects of COVID-19.

So, if you’re trying to make sense of it all our head of economic and market research, David Robertson is here to help. 

Government spending

The effects of social distancing came into full swing in March, with the government putting in place measures to stop the spread of community transition. The flow on effect of this was enormous and saw thousands of people suddenly being stood down from the workforce, with a wide range of businesses hit by the disruption.

As a result, the government implemented measures to combat the economic impact of the virus. This included stimulus packages for job seekers, small businesses and boosts for various industries under threat.

While some of the commentary has raised questions around the level of debt being incurred for future generations David states “as far as Australia was concerned, the fact that we had relatively low government debt going in to this crisis, meant that we could afford fiscal support.”

Stock market and share prices

If you’ve been paying attention to the finance news you may be across the rapid falls in the stock markets across the globe. March saw the start of the bear market with the peak to trough fall of our ASX market at 39%, before a tentative recovery over the last few weeks.

So how does this compare to the numbers we saw during the Global Financial Crisis?

“The GFC saw a fall of 55% overall, but that took 18 months; this bear market has been much more rapid; however unlike the GFC and other crises, the difference this time may be that a health related crisis should have a better defined end date, either via a vaccine, or sufficient containment and flattening of the infection curve” said David Robertson.

Jobs and superannuation

Naturally for the economy, the limitations on travel, activity and anything other than essential services will see GDP contract by its largest percentage on record this quarter and the impact on employment will also be extreme. “Recessions and crises always see unemployment rise, and this rise might exceed the post WW2 high of 11.2 % in the last recession” said David. 

Property markets

The housing market was still strong in March but it is likely too soon to see the full effects of the crisis. The market was up 0.7 % on average in capital cities but remained steadier in regional Australia. We may be likely to see the property market fall over the coming months with restrictions on open inspections and auctions.

“As there won’t be public auctions for some time now, which together with economic uncertainty may see a brief dip for buyers to consider” said David.

Watch below for the full economic update with David Robertson or visit or Business Insights Hub for regular market updates.

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