What happened on markets today? – 09.03.2020

Geopolitical factors hit the markets…

The turn of events over the weekend have escalated the geopolitical uncertainties that have embraced the markets today with a drop of over 7% across European and US markets. Meanwhile, safe haven assets have rallied to new all time highs.

Oil Price Collapse Ultimately Positive for Consumers…

The collapse in the oil price to $33 per barrel as a result of the ‘price war’ between Russia and Saudi Arabia will likely take some time to play out. We saw a similar price action through the 2014/15 market fallout which eventually reversed as OPEC agreed to stabilise the price. In the short term oil producing countries and energy companies will be significantly impacted financially. However, the lower oil prices will provide a tailwind for global oil consuming economies given input costs will fall for businesses and the consumer.

Expect Continued Volatility…

We believe that over the coming days headlines will continue to move markets and increase volatility. Whilst the market turmoil is uncomfortable; we believe that It is important for investors not to break from the medium to long term picture which should prove to be much more positive in the months ahead.

Cash Remains at the Ready…

We are monitoring these markets closely and continue to view these levels as an outstanding opportunity for the medium to long term. At the time of writing we have held fire on investing the second wave with cash remaining on the side lines as we await a semblance of calm to return.