With markets opening strongly two days in a row, have we seen the bottom in the markets?
Markets open strongly as Europe virus figures peak
- We should have hope that mainland Europe is over the peak, however attention remains on countries such as the US and UK, as the death toll keeps rising
- Unfortunately the economic statistics we’ll see in the coming weeks and months will be just as grim as the death toll
- Credit must be given to policymakers in certain countries where they have seen the economic dangers looming and focussed on keeping people in their jobs
With data suggesting the spread of the virus in Europe may have peaked and the market posting another strong opening this morning, investors may be asking whether we’ve seen the bottom in the markets. The answer is that nobody knows as these are unprecedented circumstances. While we should have hope in Europe at least we may be over the peak, this is not so much the case in the UK, the US or many other regions, so there is still a great deal of uncertainty to go and unfortunately a rising death toll.
Markets should not just be focussing on the spread of the disease but the devastation it is causing to economies around the world. Unfortunately the economic statistics we will see in the coming weeks and months will be just as grim as the death toll. The key question is how will economies and consumers react after the virus spread has abated and lockdowns are lifted? Credit must be given to policymakers in certain countries where they have seen the economic dangers looming and focussed on keeping people in their jobs, but this is not the same across all countries. So for vast numbers of people they will be out of a job and out of pocket with their spending levels far lower than prior to the disease. Even with ultra-low interest rates it may not be enough for a quick bounce back.
Nobody knows if we have seen the bottom but that doesn’t mean that there aren’t opportunities in the market. Markets are low at the moment and over the long term it will bounce back. We advocate investors drip feeding small amounts back into the market over time with a preference to do this via funds rather than individual shares.
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