Markets Now – Wednesday 25th March 2020

Money market funds saw record inflows in March as risk assets collapsed. Systematic/HF selling is well advanced, but equities remain vulnerable to LO/Retail capitulation and are losing the bid from buybacks amid a worsening earnings and macro outlook. Continued caution is thus warranted but month-end pension funds’ rebalancing following the extreme equity/bond underperformance in Q1, along with decisive central banks’ action,could provide a near-term backstop to the markets and reduce volatility.