Weekly Market Recap
Asia Pacific
09/03/2020
Week in review
- RBA cuts rates to 0.50%
- U.S. Federal Reserve cuts rates to 1.25%
- Australian real GDP expands by 2.2%y/y in 4Q19
Week ahead
- NAB business confidence
- ECB rate announcement
- U.S. CPI inflation
Thought of the week
The improvement in key business surveys such as the PMI for manufacturing and services had laid the foundation for an improving economy in 2020. The picture is very different now, as this week’s chart illustrates. The difference between this global shock and last years trade war is that viral spread impacts both manufacturing and services sectors. The manufacturing sector clearly suffers as factories in China are closed or operate below capacity, creating delays in the supply chain. Meanwhile, services activity will deteriorate as travel is avoided, as are large shopping areas and events are cancelled. China still faces the worst of the economic impact, but the risk to the rest of the world is rising.
Global growth will be weak, but for how long is unknown
Global PMIs for services and manufacturing
Source:IHS Markit, J.P. Morgan Asset Management, all returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr,AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.
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