Growth in COVID-19 cases outside of China is increasing uncertainty in the markets. Last week we wrote a blog Volatility has returned to the market on concerns over the Coronavirus. The Canadian market pulled back 6% while the US moved into correction territory with just over a 10% decline for the S&P 500 (in USD) from their all-time high. This week we have seen the market volatility continue. However, we have also seen large negative and positive swings. The markets appear very sensitive to any new information and in today's 24 hour news cycle we are seeing the impact that has had on volatility. This week also saw both the FED and the Bank of Canada cut interest rates 50bps. This will act as a further shot of stimulus for economic growth to offset the negatives of a decline in consumer demand due to COVID-19.

 

It can seem scary when you are reading the headlines. At Hayes Vickers Private Wealth we spend much of our focus on making sure your asset allocation properly reflects your risk level, allowing you to focus on the long term and to weather these markets. Portfolios with a balanced asset allocation (approximately 40% invested in fixed income) are benefiting from an increase in fixed income values that are offsetting losses in equities. Another important tenant of our investment philosophy is diversification. Having exposure to not just different asset classes but different geographies and sectors also help client's portfolios weather turbulence. This is evidenced when we compare the North American equity indices performance with the global ones:

 

Year to date performance (in Cdn $, as of March 5, 2020)

 

 

 

 

 

 

RBC's current view is that the impact to global growth will be transitory and will be a first half of 2020 event. We continue to monitor the data and feel comfortable how portfolios are weathering these markets. To read more about the potential impact to global growth please refer to Coronavirus: An outbreak of uncertainty.

 

Hayes Vickers Private Wealth