With the markets seesawing, investors are left wondering what will happen next. Here’s a brief update to provide perspective and help navigate current market volatility.
In continuation of a tumultuous month in financial markets, the morning of March 9 has seen most equity markets shed between 5% and 7% of value in the first hours of trading. This price decline is the result of two unique market issues.
First, just as the population of China is beginning to recover from the Coronavirus (COVID-19), the virus has spread to several cities across Europe and North America. The spread of the virus has market participants fearing the potential for a slowdown in global economic growth. It’s impossible to determine either the duration or the total impact the virus may have in the coming weeks and months, but there are reasons to be optimistic that it will eventually pass.
Second, failed negotiations between OPEC and Russia regarding new oil production targets have sparked a “price war”, causing crude oil prices to fall nearly 20% in early-trading. It remains to be seen whether this decline will have a lasting impact, or if it’s simply a negotiating tactic by Saudi Arabian officials to bring Russia back to the table. In the meantime, lower fuel costs are a net benefit to U.S. and Chinese consumers, but carry substantial risk to oil producers like Saudi Arabia, Russia, and the U.S. shale sector.
While these developments have the potential to decelerate global economic growth, neither is likely to send what is otherwise a very healthy global economy into near-term ruin.
So what should you do? In times like these, the best course of action for investors is to remain disciplined and stick with your investment strategy. Thankfully, you don’t have to navigate this stressful environment alone! Whether you are a retirement plan sponsor or plan participant, the team at Francis Investment Counsel is ready to help.
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