Market Update - July 2020

The pulse

  • Since the initial outbreak, COVID-19 has spread to over 210 countries, and estimates indicate it could trim global economic growth by between 3.0% to 6.0% in 2020.

  • Cyclical indicators including PMIs and unemployment rates remain weak but are improving, bolstering the market’s hopes of a speedy recovery.

  • Some countries and US states reversed course in late June, reimposing social distancing measures and closing businesses to prevent a second wave of infections.

  • Market volatility declined while large raisings of debt and equity have helped to strengthen balance sheets during this period of uncertainty.

  • The Reserve Bank of Australia kept rates on hold at 0.25% at its July meeting and is prepared to scale up bond purchases if needed.

Global economies

The rise in the number of COVID-19 cases globally continues to create uncertainty about the shape of economic recovery. An important factor in coming months will be the extent to which governments continue with fiscal measures to support businesses and households. Meanwhile, tensions between the US and China are elevated, and the outcome of the US presidential election in November remains unclear.


Economic data for June saw some upside surprises as a gradual reopening of the economy clawed back job losses resulting from the lockdown.


As European Union nations began reopening their borders to other EU members, debate continued regarding when the borders should be reopened to non-EU countries.


Economic data indicates that the world’s second-largest economy is gradually recovering from the pandemic.

Asia Region

Throughout Southeast Asia, the response to the pandemic has seen mixed results. The total number of cases in the region reached 170,000 in early July, with Indonesia the worst hit, both in terms of new cases and deaths.


The Australian economy contracted by a relatively mild -0.3% in the March quarter but given the full impact of shutdowns likely to be felt in the June quarter, it is almost certain that the Australian economy is in its first recession in 29 years.


The information in this Market Update is current as at 10/07/2020 and is prepared by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445 on behalf of National Australia Bank and its subsidiaries. Any advice in this Market Update has been prepared without taking account of your objectives, financial situation or needs. Before making any decisions based on the content of this document, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness. Past performance is not a reliable indicator of future performance. Before acquiring a financial product, you should obtain and read the corresponding Product Disclosure Statement (PDS) and consider the contents of the PDS before making a decision about whether to acquire the product.