Covid 19: Investment and Rebalancing Update
Last week saw markets fall significantly.
This was largely due to the FED's message in the US which confirmed it will be a long and hard road back to recovery. What exacerbated the fall is data indicating that coronavirus is not under control in some states and is indeed increasing. This is causing concern that bounce back could be hampered.
Yesterday, markets reacted negatively as news of a rise in coronavirus cases in both China and US spooked the markets. Fear of another lockdown in China and potentially a retreat to opening the economy in USA is creating further fear that economic slowdown could be further badly hit.
This morning, global markets have jumped following a late rally on the US markets yesterday after the FED announced further action to help the economic recovery
Our investment team are tracking the VIX Index, or to give it its Sunday name, the Chicago Board Options Exchange (CBOE) Volatility Index, which is a real-time market index that represents the market's expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors' sentiments. The VIX index will provide an indication when markets have stabilised and when we are comfortable to commence investment rebalancing again.
Not surprisingly the VIX index shot up to 43.46 given the recent events but is now calming down but still at elevated levels.
We are therefore recommending that all investment rebalancing remains on hold.