Markets rattled and the fear factor returns causing significant corrections in Global Equities and Energy Markets...Guyana at an inflection point.

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US Markets

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The coronavirus has spread to 85 countries, infecting more than 100,000 people, according to a Reuters tally based on statements from health ministries and government officials.

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U.S. Treasury debt yields plunged to historic lows on Friday, while U.S. stocks continued the decline and the Dow Jones lost more than 800 points before paring losses. Last week’s, painful market turbulence resumed Thursday, sending major stock indices down more than 3 per cent and government-bond yields to record lows as fears grew over the spread of the coronavirus in the U.S.

 

The declines continued for what has been a dismal two weeks on Wall Street as investors tried to gauge how the epidemic will affect global growth and whether governments would be able to combat it. The S&P 500 has risen or fallen at least 2 per cent for four consecutive sessions, the longest such stretch since August 2011, at the time when the European debt crisis affected markets.

 

We continue to monitor the correction in the US markets and expect a ‘V’ Shape recovery, however all indications are that the markets may have not yet reached the bottom or turning point. Expected are lower US Treasury yields and higher Gold prices as investor search for haven assets over the next few weeks. Utilities and Non-Cyclical stocks are expected to outperform the market.

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Europe

 

Doctors in European countries where the coronavirus has just begun to spread are warning that their health-care systems are poorly prepared for an outbreak on the scale seen in China, South Korea or Italy.

 

Germany’s 10-year bond yield, which is a benchmark for the eurozone, traded at a record low of minus 0.74 per cent, eclipsing the record set during last summer’s epic bond rally. Investors expect the European Central Bank to follow the US Federal Reserve lead by cutting interest rates next week. Ten-year borrowing costs in the UK also hit a new low of 0.24 per cent.

 

“The ECB is what to keep an eye on,” said Iain Stealey, a bond fund manager at JPMorgan Asset Management. “The Fed has already shown its cards, but the market is telling the ECB that it has to get involved as well.”

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The major indices in the Europe recorded large declines also, volatility spiked as investors uncertainty increased. In London, FTSE 100 Index fell 1.79 per cent last week, and over the two-week period 12.71 per cent. The German DAX Index fell 2.93 per cent in the last 5-days and 15 per cent in the last 10. In France investor’s reactions were similar, the CAC was off by 3.44 per cent in the last five trading sessions and 14.65 per cent in the last two weeks.

 

Italy has adopted mass containment strategies that should hopefully lead to a reduction in the infection rate in new cases. Investors would be focused on the ECB and their macro policy reactions to the markets’ turbulence.

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Asia

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As a new coronavirus case emerged every two minutes on average last week, South Korea focused its resources on the followers of the secretive Shincheonji Church of Jesus at the center of the epidemic.

 

Approximately, half of the Shincheonji members tested so far in the hardest hit city of Daegu are infected. But with the initial screening of the city’s Shincheonji members nearly completed, another problem has emerged in Korea’s fourth-largest city where cases are rising across the broader and largely untested population.

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Singapore’s FTSE Straits Index fell 1.66 per cent last week and over the 10-day trading sessions was down 6.92 per cent. In Malaysia, the markets were somewhat more resilient, declining by 3.14 per cent over the same 10-day period. Australia a commodity producing nation and heavily reliant on exports to mainland China saw its benchmark ASX index fall 3.61 per cent over the last week and plunge 13.18 per cent over the same two-week period.

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Emerging Markets

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In a highly controversial Guyana general elections result announced last Thursday, President David Granger was declared the winner of the March 2nd, 2020 election. The U.S. and its allies cast doubt on the vote count in a key district, region 4 and they “questioned the credibility” of the results produced by the electoral authority, which showed a win for the ruling party in the area.

 

Protesters came out, seven were shot and one killed. Former President Jagdeo, stated “just when we are approaching a future that can be clearly defined with oil and gas we will be in serious trouble.” Guyana, a South American country that is a Caricom member state has risen in popularity after a huge off-shore oil discovery, one of the biggest finds for Exxon Mobil Corp. Guyana became an Oil producing nation last year, economists project the nation’s gross domestic product to grow at the fastest pace in the world in 2020.

 

The Head of Caricom and regional Governments have urged the Elections Commission in Guyana to ensure that there is transparent and fair election process, offering their assistance to resolve the situation if necessary.

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