Australian Economy – Australia saw a drop in the unemployment rate in February while GDP for the last quarter came in higher than expected at 0.5%. This data, of course, was heavily overshadowed by the rising threat of the Covid-19 pandemic and the gradual shut down of the economy1.
Global Economy – Global travel, tourism, oil production and bricks and mortar retail have been the early casualties arising from the current health crisis. Queues at welfare administrators have already begun to explode, whilst the world hopes for a flattening of the curve. Governments have been relatively quick to enact massive economic stimulus packages to help avoid a deep economic recession.
Investment Markets – The economic consequences of the current health crisis led to the first major market crash since the GFC. Halfway through the month markets were down almost 40% from their highs, but a stimulus-led rebound saw markets erase about half of their losses. The Australian market was one of the hardest hit, finishing the month down over 21%, while Chinese equity markets fared the best2.
Outlook – No amount of monetary or fiscal stimulus is likely to stop the global economy from sinking into a recession. Thus, market participants will be looking to see to what extent economic activity will be hit and importantly, for how long.
S&P/ASX 200 – 12 months to 31 March 2020
Source: Core Equity Services
Footnotes: 1. TradingEconomics; 2. Bloomberg data .