13th Mar 2020 by Helge Kostka

Coronavirus – Keeping things in perspective


Elevated volatility, political posturing, oil price shocks and sharp equity market falls have dominated this past week. Last night the S&P  experienced a negative 10.87% move - the worst one-day performance since the 1987 stock market correction and its fifth biggest one day drop on record. The S&P has now extended its losses to 26.7% from its all-time high just a month ago. The European markets posted their worst ever single day performance and the FTSE 100 fell 9.5%. 
Market falls such as these are not completely out of the ordinary, the remarkable element is the speed of the correction. Given this extraordinarily tough week for investors we thought it useful to summarise the week:

  • Russia announced on Sunday that they would not support Opec with its intentions to curb supply of oil and instead insisted on the setting of oil prices by market forces.
  • Crude dropped by a third overnight and settled at $31 a barrel on Monday.
  • The market reaction was negative: the FTSE lost 9% and the Dow 8%.
  • At the same time the World Health Organisation prepared to declare the coronavirus a pandemic. 


  • Trump announces that he has had a great meeting on Capitol Hill with regards to a fiscal stimulus package, although he gave no details. 
  • He launched a personal attack on the Federal Reserve for not cutting interest rates fast enough.


  • The Bank of England cut interest rates by 0.5% to 0.25% and announced an increased lending facility of £200bn for banks to utilise.
  • Rishi Sunak delivered his first Budget announcing a £30bn package to combat coronavirus.
  • The lack of fiscal stimulus from the White House caused US markets to drop by 2.5%
  • After the markets closed President Trump announced that the US is to block all flights from Europe.


  • Markets reacted violently to Donald Trump’s ban on travelling, a move that was intended to calm anxiety over the pandemic. The FTSE fell 10.87% and the S&P 9.51%.
  • The Federal Reserve promised to inject trillions of dollars into short-term funding markets as government bond trading  began to seize up.
  • The European Central Bank decided to keep interest rates on hold but announced a package of other measures to support the economy
  • None of the monetary policy measures helped contain the market sell-off.
  • The UK government moved from the ‘Containment’ to the ‘Delay’ phase in its response to the COVID-19 outbreak.

A month ago, markets were being supported by low interest rates, continued liquidity from the Federal Reserve and the verbal support coming from the White House in an election year. The coronavirus outbreak has been the pin that has pricked the equity/credit markets.  
Health concerns change behaviour fast. This change in behaviour can negatively impact company earnings. This leads to the price of stocks to fall and finally a drop in gross domestic product. Without any certainty on the impact that the coronavirus will have on public health (and the economy) public markets will continue to struggle to find equilibrium pricing. 
During one’s adult life one experiences market panics on a handful of occasions. It is important during these times to ensure that one pays attention to:

  1. The Key Central Principles of Investing
  2. Financial and Economic History

Remembering the key principles of investing and working with us should help you make sounder and smarter financial decisions.

Remember Mark Twain:  "History doesn’t repeat but it often… rhymes."


Please click the links below for further insight: 

     Key principles to remember during these volatile times

     US Equity Returns Following Sharp Downturns



This document is intended for the recipient only.  It may not be copied, forwarded or otherwise distributed, in whole or in part, to any other party. 

Use of information: 

  • Nothing in this document constitutes investment, tax or any other type of advice and should not be construed as such. 
  • The investments and strategy noted in this document may not be suitable for all investors and making available the information in this document is not a representation by MASECO that any investment strategy is suitable for any particular client. 
  • This document is provided for information purposes only and is not intended to be relied upon as a forecast, research or investment advice. 
  • This document does not constitute a recommendation, offer or solicitation to buy or sell any products or to adopt an investment strategy. 

Risk Warnings: 

  • All investments involve risk and may lose value.  The value of your investment can go down depending upon market conditions and you may not get back the original amount invested. 
  • Your capital is always at risk. 
  • Fluctuation in currency exchange rates may cause the value of an investment and/or a portfolio to go up or down. 
  • Alternative strategies involve higher risks than traditional investments, such as speculative investment techniques, which can magnify the potential for investment loss or gain. 
  • Although the information is based on data which MASECO considers reliable, MASECO gives no assurance or guarantee that the information is accurate, current or complete and it should not be relied upon as such. 
  • Certain products which may be used within a portfolio in order to give exposure to particular investment strategies may not be regulated in the UK and therefore will not have the benefit of the protections afforded by the UK regulatory regime. 
  • Information about potential tax benefits is based on our understanding of current tax law and practice and may be subject to change.  The levels and bases of, and reliefs from, taxation is subject to change.  The tax treatment depends on the individual circumstances of each client and may be subject to change in the future. 


  • Past performance is not a reliable indicator of future results. 

MASECO LLP (trading as MASECO Private Wealth and MASECO Institutional) is a limited liability partnership registered in England and Wales (Companies House No. OC337650) and has its registered office at Burleigh House, 357 Strand, London WC2R 0HS. 

MASECO LLP is authorised and regulated by the Financial Conduct Authority for the conduct of investment business in the UK and is an SEC Registered Investment Advisor in the US. 

Subscribe to our newsletter and stay up to date: