Market Update

Global equity markets experienced a robust rally this week, driven by optimism surrounding America's $2 trillion fiscal stimulus aimed at mitigating the economic fallout from the coronavirus outbreak. Notably, the Dow Jones surged nearly 13% in the US, while the broader S&P 500 index recorded its strongest three-day advance since the 1930s, ending the week over 10% higher. However, it's crucial to note that despite these gains, markets exhibited significant volatility throughout the week due to mixed newsflow.
Amidst the positive developments, there were concerning factors, including a record spike in US unemployment and the imminent possibility of the US surpassing China in the number of coronavirus cases. Despite these challenges, reassurance came from central banks. Fed Chair Jay Powell emphasized the central bank's readiness to combat the economic downturn, and the European Central Bank bolstered its support by removing bond-buying limits for the pandemic emergency purchase program.
Although the global monetary and fiscal stimulus efforts are necessary responses to the rapid economic damage caused by the coronavirus outbreak, market volatility is likely to persist until there is a slowdown in the virus's spread and the lifting of lockdowns. Markets despise uncertainty, and the ongoing outbreak introduces a significant element of uncertainty.
During such turbulent times, maintaining a long-term perspective is crucial. It's common for investors to consider selling their investments when markets decline, a tendency that contrasts with consumer behavior during sales. Despite this, it's important to stay informed, and we have been proactive this week in keeping our clients updated.
In our recent activities, we repurchased Barclays shares at 103.3p, a move prompted by the strength and stability of its capital position, after having sold them earlier in the month at 118.6p. We also increased clients' investments in BHP and Glencore, both of which experienced significant declines due to the global economic slowdown. With China showing signs of recovery, the risk/reward ratio for these investments now appears compelling. However, in light of the substantial rise in US equities, we slightly reduced our US exposure by decreasing the JPMorgan US Equity Fund.
As a result, while we maintain a positive outlook on equities over the long term, particularly in Asia and Emerging Markets, our short-term stance remains cautious. We've retained a slightly higher than normal level of cash (including liquidity funds) at around 10% in the Cautious, Balanced, and Adventurous risked portfolios. We plan to judiciously deploy this cash by seizing opportunities to enhance your investments as they arise.