Is the current equity market recovery sustainable?

We offer you a succinct and non-exhaustive review of the market elements that could potentially influence equity markets in the coming weeks and months.

Supportive factors:

  • Confirmation of a rapid economic recovery (V shape scenario)

  • Energy and oil prices maintained at current low levels

  • Interest rates universe maintained at current low levels

  • Post-crash equity overvaluation reduction

  • Market discrimination at sector and stock level during the correction phase which implies a limited downward from current level

  • Central banks:

    • Increasing liquidity
    • Corporate Debt buyback program

Risk factors:

  • Revival of the sino-american economic war, unpredictability of the US President’s initiative

  • Covid-19 second wave

  • Economic recession underestimation

  • Continued declining earnings revisions

  • Market risk premium complacency

  • Joe Biden’s victory in the US Presidential Election

  • Uncontrolled indebtedness slippage (increasing risk of country bankruptcy)

  • Potential country nationalization (Europe)

  • Economic nationalism strengthening

  • Brexit

In view of the above mentioned elements, the potential for a further sharp fall seems limited. That said, it is difficult to be enthusiastic about market at the moment when listing all the risks.

Disclaimer: "This information, including any opinion, news and reports is based on publicly available source, but its accuracy cannot be guaranteed and may be subject to change without notice. BankMed (Suisse) does not guarantee the accuracy, timeliness, continued availability or completeness of such information. Neither the information provided nor any opinion expressed therein, constitutes a solicitation, offer, personal recommendation or advice. BankMed (Suisse) is not acting as an adviser to you and you are free to rely or not on such information at your own risk. Certain transactions involving securities give rise to substantial risks, including currency and volatility risk, and are not suitable for all investors."

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