MarketWatch for the week of March 2nd

March 7, 2020

Written by Steven Klos 


Markets endured a volatile week as COVID-19 fears continue to spread uncertainty about a global economic slowdown. U.S. equities finished higher this week fuelled by sharp rallies on Monday and Wednesday, however, Canadian equities ended lower amid central-bank policymakers slashing interest rates in an attempt to stabilize financial markets. The Dow Jones and S&P500 closed with gains of 1.32% and 0.61%, respectively, while the TSX suffered a loss of 0.94%. On the bright side, Canada’s employment report exceeded expectations adding 30,300 new jobs in February. Statistics Canada says that the majority of these jobs came from Quebec, which posted its third consecutive month of job gains. 


Rate Cuts 

The Federal Reserve was the first to cut rates this week, lowering the U.S. interest rate by 50 basis points to just below 1.25%. Soon after, the Bank of Canada, Royal Bank of Australia, and others followed suit; the European Central Bank and Bank of England are expected to make a decision shortly. The 10-year Government of Canada yield declined sharply this week reaching all-time lows as investors seek protection in safe assets and continue to expect more central-bank easing. 


Global Dependance on Quarantined Areas

As governments and health care officials take steps to prevent the spread of COVID-19 and treat those who are infected, manufacturers in many industries also struggle to manage the outbreak’s impact on global supply chains. Many companies are facing a supply chain crisis that stems from the concentration of their sourcing strategies. The world’s 1000 largest companies or their suppliers currently own more than 12,000 facilities, factories, warehouses, and other operations that reside in COVID-19 quarantine areas. Many factories are operating at far below capacity due to labour force shortages, forcing lower production, output and revenue forecasts. Supply-chain managers are beginning to reduce their reliance on single companies for items they purchase directly to avoid further postponements. 

Affected Sectors:

Automotive, Industrial, Heavy Machinery 

China: 2,730 (Quarantine Facilities)

Italy: 452 

South Korea: 308 


Consumer Goods

China: 1,139 (Quarantine Facilities)

Italy: 210

South Korea: 3 


High Tech, Semiconductors, Consumer Electronics

China: 3,238 (Quarantine Facilities)

Italy: 252

South Korea: 4 


Life Science, Health Care, Medical Devices

China: 1,562 (Quarantine Facilities)

Italy: 230

South Korea: 4



China: 1,778 (Quarantine Facilities)

Italy: 175

South Korea: 3 


Data Sourced From Resilinc, Bloomberg and Thomson Reuters 



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