![]() Attractive valuations, ‘fear of missing out’ and extraordinary stimulus packages also exaggerate the upside moves in prices. Investors moving into risk assets at this stage believe that we’re heading into a V-shaped recovery. At this stage, markets are repricing the worst-case scenario due to the virus outbreak, but in my opinion, it’s still too early to justify a prolonged move higher. The drop in newly infected cases and death toll sparked a sharp rally in equities, with US stocks registering its best day in a fortnight – and its eight best day since the end of the second world war – as the S&P 500 and Dow Jones Industrial Average both rallied more than 7% on Monday. That’s the first time we have seen a single-digit number since March 14. Total death rates had decreased from 13% at the start of April to 7% yesterday. The declining number of deaths registered due to COVID-19 suggests that we are winning the fight against this horrible virus. It saddens me to use a ‘death’ indicator as a financial market tool, but that’s what’s driving investors at the moment. ![]() Meanwhile, in the US, the governors of New York, Louisiana and New Jersey pointed to cautious signs that the virus outbreak may be starting to flatten. Looking at the new daily infected cases and death toll from Spain, Italy, Germany and France, all of those countries seem to be heading into a downward trajectory. The coronavirus outbreak is starting to level off across many countries and cities. The world has finally seen a glimpse of light at the end of this dark tunnel.
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