Road to market recovery remains far away

It’s set to be another rocky week in the markets as the toll of the virus starts to become more apparent

Article updated: 30 March 2020 10:00am Author: Joe Healey

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  • As social distancing measures in the UK look likely for the longer term, the chances of a V-shaped recovery become slimmer
  • Across the globe, Central Banks are desperately trying to steady a sinking ship
  • With businesses adapting to extreme circumstances, e.g. EasyJet grounding all flights and trading figures being postponed it appears there are testing times ahead

It’s set to be another rocky week in markets as the toll of the virus starts to become more apparent. It seems at least for the near-term, social distancing measures are here to stay following Government guidance over the weekend, which will likely hurt chances of a V-shaped recovery. WTI oil slid below $20 last night revealing the continuous depreciation on expected future demand, with Brent dropping to around $23.50. There is potential this could go even lower as supply starts to flood storage space, which could fill in the next month as a result of the combination of higher supply from the price war and lower global demand.

Shifting to the global economy, Central Banks are desperately trying to steady a sinking ship. Currently, the virus is continuing to drag the global economy down while stimulus measures are eagerly attempting to find a floor. Overnight, China’s Central Bank offered some accommodative signals resulting in S&P futures pointing to a marginally higher open. However, for me there’s still too much uncertainty ahead to paint a broadly positive picture for future market direction. With businesses having to adapt to extreme circumstances – EasyJet grounding all flights, trading figures being postponed and a rapid shift to cost-cutting – it appears there are testing times ahead.

As much as I would like to say I have a rosier outlook for markets, in the near-term this just isn’t the case and there will still likely be a lot of volatility over the coming week or so. Coronavirus cases still have their lid intact - when testing kits are distributed wide and thorough testing begins, it will not be a surprise to see cases surge again uncovering a clearer impact on the economy – ultimately leading to higher bouts of volatility. Longer-term, the prospects do remain strong as the virus is contained and consumers and businesses gradually return to normality. However it’s likely to remain a bumpy road at least for the next month or so.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Joe Healey

Investment Research Analyst

Following his completion of the graduate scheme, Joe is an Investment Research Analyst covering equities. He holds a BA Hons Business Management degree and is currently studying towards CFA Level II after passing CFA Level I in June 2019.

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