Reality Bites

Market Update: 2 April 2020

As euphoria makes way for stone cold truths (and in NSW a 90day lockdown), Global equities fall as Trump tells the American people COVID-19 may last at least until June and deaths may be as high as 240,000. In comparison to highest mortality rates of larger countries (Spain and Italy), it’s saying over 2.4m Americans would be infected, if it were at China’s rate, that’s over 5.8m citizens.

AUD moves to 0.6080 after another quick illiquid blip – this time up to 0.6180 and 10yr US treasuries make their way back down to 0.58%. Trump is igniting talks with Oil nations and thus Oil rallied 4% – which is also USD supportive.

What would seem impossible a week ago, as that narrative continues, the US are now over 211k cases and almost 2x that of Italy and 2 ½ x that of China – although it was revealed by US intelligence that China withheld their information on true numbers. Those betting on peak would be stopping out as new cases came to new highs.

Again we would stipulate, it doesn’t really hit home until it’s on your doorstep and with such numbers in the US, sentiment if not already soured, can remain in a malaise for some time.

Positives… peaks are showing in Spain, Italy and Germany – but France and UK had a blip higher of new cases. Australia has also slowed, but complacency is not for now. Whilst China is at 94% recovery, most nations are lucky to be in double digits, Europe as a whole is closer to 20% whilst the US is 4.2%. Globally including China that average is at 21%.. which if anything, is at least a slow increment up in the past few days.

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