Shane Oliver’s latest article looks at the increasing spread of coronavirus.
- While reported new coronavirus cases in China have slowed, the pickup in cases outside China has led to a renewed sharp fall in share markets, commodity prices and bond yields.
- Our base case is that the outbreak will be contained allowing share markets and bond yields to rebound in the June quarter.
- However, the hit to economic activity is deepening and the risks around Covid-19 becoming a pandemic have risen leaving share markets vulnerable to more falls in the short term.
- The rising threat to the Australian economy from coronavirus is adding to the likelihood that the RBA will cut rates in March or April and the pressure for more fiscal stimulus in the May budget is increasing.
- The key for most investors though is to recognise that periodic share market falls are inevitable and hard to time and so it’s best to take a long-term approach to investing and stick to it.
Read Shane’s complete article here. If you have any questions, please do not hesitate to contact me.