Have the markets already passed their nadir? Expecting everything to return to ‘normal’ shortly? Is a ‘V’ shaped recovery in store? Or are investors just trying to catch a falling knife?
With major equity markets around the world having rebounded from the shocking lows touched in March to put in an impressive rally over the past few days, these are just some of the questions investors are now grappling with.
Having not dealt with such a global Pandemic before, they are unclear when past realities might again be relied upon. While it is realistic to expect scientific innovation to overcome this unique global health challenge, a ‘new’ normal that eventually emerges could see a government and geographical refocus to significantly change accepted policy toward investment, individual wealth and drive for long-term economic growth.
On the face of it, the shake-out has now created some quite exceptional value across global equities. But, with many nursing heavy losses and the global ramifications of the Pandemic still far from understood, investors could look to history to help comprehend the possible cycle going forward and opportunities to reposition longer-term portfolios.
Having already seen governments around the world pledge fiscal and other stimuli/funding packages far beyond anything the world has seen since WW2, traders keen to recover some of their losses bought heavily into recent hints from Asia and Europe that their local COVID-19 infection rates may be peaking, together with hopes that even New York City might be getting the situation under control meaning the US generally might be able to accelerate the ‘reopening’ of its economy.
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