2020 has been a year that will burnt into our memories for many years to come. COVID-19 has caused substantial disruption to the way we live, interact and socialise, not to mention the disruption caused on financial markets. It’s hard to see anything outside of war being more profound.
Governments around the world are now beginning to collaborate in a meaningful way - to try and get things under control, whilst at the same time placing trillions of dollars in the financial system to help provide stability. Although I agree with the stimulus measures, my gut tells me that there will be a “sting in the tail” sometime in the future – possibly through higher taxes or new levies being applied.
Italy has taken drastic steps to arrest the virus and have recorded their lowest infection rate in three weeks, whilst France looks to be “flattening the curve”. Wuhan, where many believe the crisis originated from is planning to open its boarders from Wednesday. The world will be watching, as this may offer a glimpse to when we’ll be able to enjoy the freedom we have recently lost.
Unfortunately the mortality rate for COVID-19 is around 5.50% globally, thankfully in Australia the number is much lower. The heat map below clearly identifies Europe and the US as key areas which will need substantial support.
Although the total rise in cases continues to climb, the growth rate is beginning to slow. Overnight, US and Asian markets were up by as much as 7.7% due to encouraging data coming out of Italy, France and New York. Since the recent market lows, markets around the world have rallied by around 15%. As markets are beginning to stabilise, those who maintained their nerve through the crash are beginning to be rewarded. Locally, the Reserve Bank met today and decided to HOLD rates at 0.25%, something which is expected to remain in place for the foreseeable future. If you are currently in receipt of a Centrelink entitlement, you should have also received your first $750 economic Support Payment, with a second payment due in July. The Government has essentially made this additional payment in an effort to “stimulate” the economy, however it may be difficult to spend given that many shops are closed. Over the past few weeks we have also received many calls from people in distress about their financial situation. Unbelievably many of the calls have not been from existing clients, but from new clients seeking guidance on their affairs. If you have family or friends who are worried about their financial situation, please don’t hesitate to pass on our details. From the Synergy team, we hope you all have a safe and healthy Easter break.