Market Update 31 March: Equities higher as China PMIs positively surprise

• The oil price had a rough day, falling to its lowest price since 2002 before closing at USD 22.8 per barrel. Tuesday has so far been better with the price up 3% before 11am.
• Responding to the oil price, the NOK has appreciated against other major currencies. Norges Bank meanwhile are increasing their daily currency purchasing from NOK 1.6 billion to NOK 2 billion.
• For the first time in a while, there is positive economic news to report. Chinese companies have reported a pick-up in economic activity this month, as they start to recover from the Covid-19 shutdown. The Chinese composite PMI, which tracks activity across service sector firms and factories, surged back to 53 from a record low of 28.9 in February. That’s stronger than economists expected and lifts the PMI above the 50-point mark that separates monthly growth from contraction. Both key sectors of the economy reported a pickup:
  • Manufacturing PMI: Up to 52 in March, from 35.7 in February
  • Services PMI: Up to 52.3 in March, from 29.6 in February
• It’s early days, of course. The rebound may be partly due to the shocking slump in February and the PMIs are ‘soft data’, relying on managers reporting on their own conditions.

• Below are two interesting charts on the response time for fiscal and monetary policy during the coronavirus crisis versus the financial crisis.  This time round the US Government and Federal Reserve has responded much quicker, based on both the emergency of the current crisis and the lessons from the previous one.

SKAGEN Funds Summary

• No material changes.
• All funds continue to have high levels of cash and / or highly liquid portfolios.