Stock Market Volatility During the Covid-19 Pandemic

A week has always been a long time in politics, but a week has never seemed quite so long as it does for all of us at the moment.

The stock market falls we saw in March were remarkable because although the markets fell further in the financial crash of 2008, they didn’t fall as sharply. The Coronavirus has given the world a huge shock and it has reverberated across every stock market. At the time of writing, we’ve seen some sense of order returning to the markets after the indiscriminate selling off of everything followed by rapid leaps only a week after the huge drops and the general view across our fund manager contacts is that whilst we won’t know what the lowest point will be until we are through this, the “bottom of the market is being formed”.

We may yet see more volatility. There may be days when we start to see the markets climb as they did on when the FTSE rose by 9% in a single day. But we should not be surprised or unnerved if there are also days when we give up some of that recovery too so be prepared for that as well.

The key message is to stay calm. Here at Acumen, we have been reassuring our clients that the markets often overreact – the indiscriminate selling off of the likes of Unilever, a behemoth of a company selling such a variety of the goods we regard as staples and essential in times of lockdown, from PG Tips, Liptons Tea, Dove soap, Comfort fabric conditioner, Persil and Domestos to Marmite and Pot Noodle. When Unilever got sold off along with EasyJet and Carnival Cruises we knew that logic had left the room.

There are some real bargains out there now – quality investments at much lower prices which your fund managers will be looking to take advantage of, little by little. As the buyers return, we will see recovery although it won’t be a straight line. That said, you won’t see fund managers rushing in, they’ll be cautious, taking a day at a time, testing the water so to speak. This virus isn’t beaten yet and the markets, being forward-looking, need to see the evidence that its spread is being contained and controlled.

Turning to worldwide financial support which has been and will be so important in supporting the global economy, we saw record-breaking packages announced every few days and this goes to show that there will be a recognisable world to return to when the lockdown is over. Rishi Sunak announced welcome support for the self-employed some days after the support for business and the employed was announced and support for charities, hard hit by the lockdown and ban on mass gatherings and fund raisers has also been launched now.

Angela Maher was a guest on BBC Radio Merseyside’s Phillips Phone-in, invited on to talk about the stock market volatility and what it meant for pensions and savings. Her final message was that the markets will settle and the valuations will recover – some, like Unilever, having the capacity to do so more quickly than others- but that our health and well-being is what we need to be focusing on right now. Our clients have the knowledge that their pensions and investments are being looked after by professional fund managers who are doing the job they are being paid to do. We all need to make sure we stay safe, follow the advice to stay home and the more we can do that, the quicker we’ll be through this and out on the other side.

In the meantime, we are working from our homes where we have all the technology to support you as usual. Some things are taking longer to do, for example as staff in the insurance companies are working remotely, our team are reporting delays in getting through to them but we are doing everything we can to make sure you get the best possible service at all times. The world has slowed down somewhat (some might say that’s not a bad thing) but we are always available for a chat, to advise you on your next steps, to bring you up to date on what support is available for businesses or if you are self-employed – or if you know someone who needs our help and support.