The Covid-19 remained in the headlines as reported cases continued to rise. The severity of the outbreak had led the WHO  to declare it a pandemic last week.  To date, there are been more than 150,000 reported infections, with over 5,800 fatalities as governments globally race to contain the spread. The tumble in oil prices put additional pressure on global equity markets as a wagging oil war between Russia and the Middle East sent oil prices into the ground.

 

In the news
  • Covid-19 continues to cast a dark shadow over global economies as the outbreak spreads, with rising concerns that the outbreak will be prolonged due to the slow response from some countries.
  • Following the rapid rise in number of reported cases, Germany, France, Italy, Spain, Greece, Belgium, and Austria have since imposed containment measures, including travel bans, gathering restrictions, and closure of schools, universities, restaurants, and bars. 
  • After being on lock-down for most of February, China is now seeing a sharp decline in its number of reported cases. The improved situation has also led to China’s major cities seeing a re-start in its economy as construction, and logistics industry move back on track.
  • The US equity market’s circuit breaker, which halts trading after the market falls more than 7%, was triggered twice last week; first on Monday, and again on Thursday which led to the US equity market to move into bear territory.
  • Global financial markets followed suit, and dove lower last week leaving a sea of red on the trading board.
  • US’ President Trump announced a state of emergency on Friday, allowing access to US 50 billion in federal resources to address the virus outbreak. Markets remain sceptical as little is known on how the US plans to contain the spread of the pandemic.
  • Nevertheless, the US equity markets spiked towards the end of its session but was not enough to lift the market’s weekly performance.
  • Oil price also slid lower last week as the wagging oil war continued. With no clear indication that Russia is willing to go back to the negotiating table with OPEC, coupled with the slower global growth environment, analysts are expecting oil price to remain lower in the near-term.
  • Following the downtrend, Gold price also tumbled lower in a week that saw billions being wiped out of markets.

 

In other economic news
  • Global central banks continued to announce stimulus packages in the wake of the virus outbreak.
    • The US Federal Reserve slashed its interest rates to 0% over the weekend, in a bid to support its economy.
    • The Bank of England (BoE) announced a 50bps rate cut, along with GBP 30 billion stimulus.
    • Germany announced it will add an additional Eur 12.4 billion in infrastructure spending over the course of the next 3-years.
    • Italy, which is now on lock-down following the rapid rise in number of cases, announced that it would inject Eur 10 billion into its economy.
  • China released weaker economic numbers for the period of January to February 2020, acknowledging the toll that the virus outbreak has taken on its economy.
    • Industrial output fell 13.5% YoY between the month of January to February 2020.
    • Retail sales shrank 20.5%, missing the analysts forecast of a 0.8% growth.  The reading also deteriorated from the December growth rate of 8%.
    • While China is getting back on its feet, officials have warned that it would take a longer time before the economy is completely back on track.

 

What to look out for ahead?
  • After a series of rate cuts across the global, we will be keeping an eye on the BoJ as its policy committee will be meeting on the 18th.
    • Markets are expecting the BoJ to step up its ETF purchases at a quicker pace to support its stock market.
  • The development of the pandemic will remain a headline grabber as more countries are anticipated to impose restrictions to contain the spread.
  • We also expect more stimulus plans to be released by the global central banks as pressures continue to mount for the global financial markets.

 

ETF strategies at TradePlus
  • To Hedge
    • 0828EA – a Gold-backed ETF widely used as a storage of value in times of market uncertainty.
    • 0833EA – a HSCEI Inverse strategy that helps hedge your portfolio against weakness from the performance of China companies listed on the HKex.
    • 0831EA – the NYSE FANG+ Inverse strategy that hedges against the performance of tech stocks listed in the US.
  •  To Add Position
    • 0829EA / 0829EB – a strategy that gives investors exposure into the consumer focused sector through China companies listed in HK, and the US
    • 0832EA – a 2X leveraged strategy on the HSCEI that captures 2 times the performance of China companies listed on the HKex
    • 0830EA – a 2X leveraged strategy on the NYSE FANG+ that captures 2 times the performance of US listed tech stocks.

 

A look at the performance of the TradePlus ETFs, and major global indices

 

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