Markets had a strong week last week defying negative news around China and the US. It seems that the protesting in the US is enough to see markets fall. This could be only short term though; it is still too early to tell. We will be watching to see if markets can hold trend or not on the pull back.
In the background the focus point will still be Recession VS Stimulus. The moves we see in the medium to long term in the markets will be focused towards levels of stimulus and what they will do next to boost their economies.
Despite the uncertain times, markets are seeing the light at the end of the tunnel. Markets are being held up at current levels with-
- Economies are on a reopening path
- Hopes of a vaccine
- Low interest rates with the view they are going lower
- Bond buying, to keep the Credit markets ticking along
- Increased unemployment benefits and programs to help keep staff employed that would have lost their jobs otherwise
- Hints of further stimulus on the way.
Earnings sentiment is still exceptionally low, with many analysts downgrading expectations. If sentiment continues to increase around lockdown relief, we could see a shift here later in the year. But for now, things are expected to be negative through the July – August reporting seasons. Future prediction on growth at this stage seems to be weak through the rest of this year and most of next, where it is expected to jump strongly.