Volatility has been rife in the markets, with a flood to the dollar after traditional safe havens of bonds and gold seeing drops in value. Bonds, in particular, have had a troubled week with central banks slashing interest rates further and governments going on spending splurges to assist corporates in dealing with the loss of income and discourage them from making redundancies.

Equities too have had a time.  On Tuesday the FTSE 100 breached below 5000 for the first time since 2008 when it sunk to 3753. It did, however, recover on Thursday & Friday to finish the week at 5190.78 a 3.2% decline on the previous Friday close and 33.4% below the high of 7778.79 it achieved on 18th May 2018. It’s been a similar story in the US with the S&P500 seeing a 10% drop this week and 34% wiped off the index in a month – property, airlines & oil companies being hit particularly hard.

While the above makes pretty sombre reading, there are signs that there is light at the end of the tunnel. Italy & China appear to have stemmed the spread of the virus and the UK, the US and European governments have taken unprecedented action to prop up their economies and stop the spread.  Early signs are this is working and confidence is slowly returning to markets.

I do expect 2020 to be a challenging year for us all; markets will continue to be unpredictable and companies will feel the effects of this crisis for several months. However, I do believe this will prove to be a time where companies will reset, reassess their cost bases, look for opportunities to be more efficient and socially show that individuals can work efficiently, perhaps even more effectively while working remotely.

This will, in turn, present opportunities for you, as investors.  We can target key growth areas, green investments, clean energy, socially responsible assets, and ethical holdings. Shareholders will be putting significant pressure on corporates to move in this direction, those companies that do will see the benefits in their share price. I also expect small caps to overachieve with them reaping the rewards from government spending.