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The world continues its gradual shutdown

Published March 23, 2020

Author: Rowan Murphy


The world has continued its gradual shutdown over the weekend with Italy banning movement inside its borders, Germany announcing a 2 person limit to any gathering and the US tightening lockdowns in several major cities, the biggest surprise (to me) being the complete lockdown for New York and California, excluding essential services.

Markets will be digesting potential benefits from yesterday’s announcement of further fiscal support for the Australian economy from the Morrison Government. The latest spending package takes the total amount of fiscal stimulus announced by the government to nearly $84b and an additional ‘package’ from the RBA, mainly targeting support of the banking system, for another $100b.

Overseas greater measures were also announced with Germany flirting with the idea for a EUR500bn fund to support businesses, the ECB easing capital requirements on banks, the Fed announcing they will now buy municipal debt and the UK also announcing a wage subsidy scheme.

Though the exact impacts still remain difficult to quantify, the drag on economic growth because of the unfolding coronavirus shut down will likely be bigger than previously priced by market participants. In trade so far today, the RBNZ has announced their own QE programme

With no significant data today, markets will remain focussed on COVID-19 and associated developments.

 

 

Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (Australia) Pty Ltd on 30 March 2020.

Rees Logan, Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (NZ) Limited on 30 March 2020.

Any queries regarding the Administrations should be directed to encorefx@au.ey.com.