Monthly review end-March 2020

  • 06 April 2020
  • 5 mins reading time


As a result of actions being taken to slow contagion of Covid-19, UK equities fell along with those of many other global equity markets during the opening weeks of March. UK assets were also affected by sharp movements in the value of the pound relative to other currencies. By the end of the month, the pound had largely recovered its relative worth, but share prices had posted some of the sharpest falls ever seen.


US equities declined significantly. The S&P 500 reached its lowest point in over three years before the Federal Reserve’s (Fed, equivalent to the Bank of England) financial stimulus actions prompted a tentative recovery. The Fed cut interest rates twice in the month for the first time since the global financial crisis, and announced an unlimited bond-buying programme which has the effect of injecting new cash into circulation.

The upper house of the US government also passed a $2 trillion stimulus package. But those measures will take time to reap rewards, in the meantime, reality was hammered home by jobless claims which rocketed by over three million in March and economic indicators suggested that more pain will follow.


The same sounds were echoing across the rest of the world. Efforts to curtail the pandemic brought business activity to a sharp halt sending stocks down and bond prices up across Europe and Asia.

Healthcare and consumer staple stocks managed to avoid the worst of the falls, that unwanted crown landed on the heads of travel and leisure companies.

Investors moved money into perceived havens such as the dollar, and that put pressure on companies and countries that have outstanding bonds or other loans in dollars. The higher the dollar climbs, the more expensive it becomes for those countries to maintain their debt obligations.


Government bond yields, like most other financial assets, experienced significant levels of volatility. There was a sharp demand for and price of lower-risk rated bonds, such as US and UK government bonds.

By contrast, higher-risk rated bonds, such as those issued by companies and countries in emerging markets, were being sold as investors tried to reduce the level of risk to which their money was exposed. The sell-off was sharper in more vulnerable sectors related to travel and retailing.

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Past performance is not a reliable indicator of future results. The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor might not get back their initial investment.

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