Historical month

For the month as a whole, the US S&P 500 Index fell by 12.4 per cent measured in USD, while the Stoxx 600 Index dropped by 14.4 per cent measured in EUR. The Oslo Stock Exchange (OSEBX) declined by 14.8 per cent. At the most, the stock exchanges had fallen by 25-30 per cent from their peak. At the same time, a number of stock exchanges experienced daily fluctuations of as much as 10 per cent.

Recession in sight

The coronavirus spread rapidly in March. Travel prohibitions, quarantines and lockdowns in country after country led to economies coming to a sudden halt. At the same time, the number of people temporarily laid off and unemployed rocketed. During the month, the epicentre gradually shifted from Italy and South Korea to Spain and the USA. In China, we saw signs that the worst spread of the disease may be over, and at the same time we received signals that the country's economic activity is recovering. In the eurozone and USA, the greatest effects on the economy are ahead of us. Many analysts expect a fall of 20-30 per cent in the quarterly GDP growth annualised in the second quarter. At the same time, a recovery of almost the same size is expected in the third quarter.

Steady stream of support packages

The central banks cut interest rates further in March, while a steady stream of different support packages were launched. The US central bank (Fed) was once again at the forefront and announced massive repurchases of government and mortgage bonds. The Fed also announced it would buy corporate bonds for the first time, and offered dollar liquidity to other central banks. The last two measures were important for the liquidity squeeze in many interest-rate and credit markets.

Financial policy in record time

The politicians also got involved in March and agreed on support packages in record time – much faster than during the financial crisis in 2008. The US agreed on a stimulus package worth all of USD 2 trillion, equal to 10 per cent of the country's GDP. In comparison, the stimulus package during the financial crisis was USD 800 billion.

The road ahead …

Although the markets calmed down significantly towards the end of the month, we must no doubt expect them to fluctuate for quite a while to come. Long-term fund savers should continue to keep calm and think long-term. We also know from experience that it's worth buying some extra fund units during just such periods.

"Nothing in life and nothing that we do is risk-free"
Ken Salazar