Equity markets have pulled back in the past week with the STOXX Europe 600 Index down 5.7 per cent, the worst since March 13. Losses were also seen in Australia and the US with the S&P500 and the S&P/ASX 200 down 4.78pc and 2.52pc respectively.
The biggest losses occurred on Thursday, with European and US markets falling by more than 4pc and 5pc respectively. This market selloff is also one of the biggest drops we have seen since March and halts a remarkable recovery in markets that saw the "tech heavy" NASDAQ index reach a record high during the week.
Markets sold off following the US Federal Reserve chairman Jay Powell's press conference which contained some negative messages about how long the economy would take to recover.
New median forecasts predict that gross domestic product growth will slow by negative 6.5pc in 2020 before recovering 5pc in 2021 and 3.5pc in 2022.
This news weighed heavily on energy and financial companies that were down 9pc and 8pc on Thursday's session in the US.
In Australia, financials and energy were also some of the hardest hit sectors. National Australia Bank (NAB), Westpac Banking Corp (WBC) and ANZ Group (ANZ) were among those most affected. Week on week, their share prices fell approximately 4.6pc, 4.8pc, and 4.3pc respectively. As mentioned in previous articles, these companies have performed extremely well over the past month, so although the share prices have fallen, their share prices are still up significantly month on month.
Oil Search Limited (OSH) explores for, develops and produces oil and gas properties in Australia, the United States and Papua New Guinea. Because of the company's exposure to the low oil price, its share price has fallen dramatically this year - it shed 11.8pc week on week because of the negative economic outlook.
Woodside Petroleum (WPL) is the pioneer of the liquid natural gas industry in Australia and the largest Australian natural gas producer. The company also has oil operations. Similar to OSH previously mentioned, the company's exposure to the low oil price has led to significant falls in its share price and the recent negative economic outlook placed downward pressure on the share price as it fell about 8.5pc week on week.
- This article does not take into account the investment objectives, financial situation or particular needs of any particular person. Before acting on any advice contained in this article, you should assess whether it is appropriate in light of your own financial circumstances or contact your financial adviser. Christopher Hindmarsh is an adviser at JBWere Limited.