I hope this article finds you and your family well. As part of our commitment to keeping you informed in the current environment, we are providing a recap of what took place in the markets in late April.
Key developments as of April 24
Canadian and U.S. equity markets continued to fluctuate as investors weighed the possibilities of slowly easing lockdown restrictions and a quick economic recovery against the fallout of plummeting oil prices.
- On April 20, U.S oil prices fell below zero for the first time in history, ending the day at -$37.63. With so much of the economy paused, the absence of demand has left a lack of storage facilities for soon-to-be-delivered oil. As expected, last week’s OPEC production cut was not enough to rectify this.
- Canada’s annual inflation rate fell to a near five-year low in March as gasoline prices plunged.
- The U.S. announced weekly jobless claims of 4.427 million, bringing total job losses to over 26 million in the last five weeks, wiping out all gains since the Great Recession.
- The U.S. House of Representatives approved a $484 billion coronavirus relief bill to fund small businesses and hospitals; this brought the country’s total crisis response funds to almost $3 trillion.
- The number of confirmed COVID-19 cases worldwide surpassed 2.6 million. Europe continued to slowly loosen restrictions in certain regions, as did some southern U.S. states.
Key developments as of May 1, 2020
North American stock markets continued to climb, gaining momentum as a growing number of European countries and U.S. states continued easing measures put in place to enforce social distancing.
- U.S oil prices began to recover slightly due to slowing growth in U.S. inventories and optimism that demand would increase as restrictions on businesses and the movement of people are lifted.
- Gilead Sciences announced positive data from clinical trials of its antiviral drug remdesivir, with the Food and Drug Administration set to make it available to COVID-19 patients as soon as possible.
- The U.S. announced weekly jobless claims of 3.839 million, bringing total job losses to over 30 million in the last six weeks.
- The U.S. Federal Reserve left interest rates near zero and stated it intends to keep them at that level until the economy returns to full employment and 2% inflation.
- On April 29, The U.S. Bureau of Economic Analysis provided an advanced estimate that real gross domestic product (GDP) contracted at an annual rate of 4.8% in the first quarter of 2020.
- Germany’s rate of COVID-19 infections began to rise shortly after the country began easing lockdown measures, raising concerns that restrictions would have to be re-imposed.
How do these developments affect my investments?
North American stock markets have rebounded smartly from their recent lows reached in late March, despite the increasingly poor economic data. This shows why it is important to keep in mind that in the short term, no one knows which way markets will move.
While several jurisdictions around the world are lifting their lockdowns, there are still many unknown variables that could affect the pandemic and the outlook for the economy and the markets.
Should any of this change my views on my investments?
The market’s recent turbulence has been difficult emotionally for many investors, and we should be proud that we have followed our long-term plan. Going forward, we will continue to see numbers like those above; some may be positive for the economy and others negative, but it is important to see them as data that are constantly changing, rather than as indicators to overhaul your portfolio.
To emphasize the benefits of staying invested in both good times and bad, we are sharing the chart below. Regardless of what the market does in the days, weeks, months and years ahead, history has shown that staying the course has reaped benefits over the long run.
Our message is this: just as it was wise not to panic when markets rapidly declined during the virus’s outbreak, it is also helpful to remain cautious as events progress. Sticking with the long-term plan we have built together is the key to navigating both the good times and the bad.
We are always happy to discuss your investment plans if you feel it would be helpful. Please do not hesitate to contact us if you would like to talk or to schedule a video chat. It's another way that we are here for you.
- Elaine Kelly, MBA CFP, FCSI, Senior Investment Advisor, Manulife Securities Incorporated
- David Wyatt, BA, B.Comm, CFP, Investment Advisor, Manulife Securities Incorporated
- Katlin Wyatt, BA, Investment Advisor, Manulife Securities Incorporated
- Diana Kancko, Executive Assistant
- Terry Wyatt, Executive Assistant
Sources: CI Investments Inc., Johns Hopkins University (JHU), Thomson Reuters Corporation, oilprice.com, cnbc.com, bbc.com, The Wall Street Journal, cnn.com, cbsnews.com, The New York Times, and Yahoo! Finance Canada