The week began with a major crash in the energy markets after Saudi Arabia announced a move to slash oil prices by boosting its production by more than 10 million BPD in April. Saudis decision comes after Russia’s refusal to join OPEC’s crude cuts at the members and non-members meeting in Vienna.
During the week, global stock markets entered a bear run as worries deepened about the potential impact of the COVI-19 on the global economy. The virus has wiped out more than $15 trillion in various assets across the globe in less than a month. US President Donald Trump announced a national emergency even as the World Health Organisation declared the virus a pandemic.
In the weekly Global Markets podcast series, we hosted Gaurav Kashyap and Mark Lee from Equiti Securities in Dubai and London respectively. The two discussed how the outbreak of the virus had sparked the price war between Russia and Saudi Arabia. Listen to the podcast below;
Stocks of major airlines took a hit after the United States suspended travel from Europe. The International Air Transport Association (IATA) issued a statement saying the aviation sector could lose more than $110 billion due to the virus outbreak.
China’s President Xi Jinping noted that the spread of the virus had been contained during a visit to Wuhan. According to South China Morning Post, the country has taken a move to cut down down income tax by 15% for foreign companies setting up in an attempt to curb the impact of the virus.
The Bank of England cut its main interest rate to 0.25% from 0.75% and added that it was on course on its purchase target of £435 billion while non-financial investment-grade corporate bond purchases would remain at £10 billion.
“Although the magnitude of the economic shock from Covid-19 is highly uncertain, activity is likely to weaken materially in the United Kingdom over the coming months.” BOED noted in a statement in its website.
Major Corporate Announcements
Billionaire investor and CEO of Berkshire Hathaway Warren Buffett announced that the company will hold its yearly meeting, but without the presence of shareholders citing the global pandemic. According to media reports, Warren has lost about $4 Billion during the crisis given his stakes in airline stocks. However, the 89-Year old’s company has about $120 Billion in cash and this could probably an opportunity to buy the dips.
Microsoft on Friday announced co-founder Bill Gates is retiring from the company’s board but will continue to serve as technology adviser to CEO Satya Nadella. Meanwhile, Warren Buffett’s Berkshire Hathaway noted Gates will also step down from its board. Berkshire noted that Gates, who spent 15 years on the board, is set to be replaced by former American Express CEO Kenneth Chenault.