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General Economic Overview – Quarter 1 2020
On a number of occasions we have been in the position of commenting on how one quarter’s return has differed sharply from the previous quarter, but the events of the first quarter of 2020 have taken this to another level. The word unprecedented is frequently used as a descriptor for what has happened in the last two months and it is probably the most appropriate choice at this point during the current global pandemic. The data changes we have seen in all countries across the globe has been striking in its speed and reach. From a position of significant recovery in equity markets at the end of 2019, we have seen a rapid deterioration in sentiment and market levels with many main markets down by close to 40% at their peak. The cause of course has been the Coronavirus outbreak which we believe started in the wet markets of China but soon found its way across the rest of the globe. The virus itself does not appear to be as deadly as some we have seen previously, such as swine flu or SARS, but it is very virulent and has the potential to overwhelm most health services if not managed appropriately.

The next two to three weeks will be critical for most of western markets with Spain and Italy now overtaking China in terms of the number of Covid-19 deaths, and the US having more cases than any other country across the globe. During the next few months it should become evident whether the lock-down policies in place in Europe and elsewhere are starting to work. Modelling suggests that the peak of active infection rates should be reached in early to mid-April, but the actual path of reported cases depends on the ramping up of testing and increasing our knowledge of how it is spread.

Please be aware that this material is for information purposes only and is supplied by Rayner Spencer Mills Research, an independent research consultancy. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are, unless otherwise stated, Rayner Spencer Mills Research own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. Neither Equim Wealth Management Limited or Rayner Spencer Mills Research accepts any legal responsibility or liability for any matter or opinion expressed in this material.