March 9, 2020 - On Monday, March 9 equity markets suffered their worst day in recent memory as a plunge in oil prices and bond yields exacerbated the panic selling already occurring in response to fears that the coronavirus will stifle the global economy. Oil prices had come under pressure from concerns about weak global demand. Then, over the weekend, Saudi Arabia and Russia failed to agree on oil production cuts, raising concerns that unconstrained supply would ignite a price war. With capital markets already in the throes of significant uncertainty, these events brought on a wave of dramatic selling and markets set new lows for the year.
As of this writing, major US equity indexes are down about 15% year-to-date. It may comfort investors to know that the average market decline in an election year is 10% and, with US stocks having delivered such strong gains in 2019, the price action to date has been within the bounds of historical context. Still apprehension about COVID-19 and the truly astonishing action in the oil market leave many more questions than answers for the days ahead.
We stand behind our global market update written on February 27th. We believe there is a high probability that this episode will pass and be followed by some degree of market recovery and the answering of some economic questions through the balance of 2020. Though we cannot be certain of this outcome given how fluid the current situation is, we are committed to helping clients understand events as they unfold.
We understand that today’s market action is upsetting and want our clients to know that the entire team at Pitcairn is closely monitoring all market events and will continue to keep you informed as conditions change and more facts are known.
Pitcairn will be hosting a Global Market Update conference call for clients on Thursday, March 12th at 3:00 p.m., with guest, Jason Trennert of Strategas.