Wealth Management: Market Perspective – This too shall pass (en anglais uniquement)
Kevin Gardiner, Global Investment Strategist, Wealth Management
Just over a month ago an unusually positive consensus was making us wonder if stocks were running out of tactical headroom. Little did we know: the spread of the coronavirus outside Asia saw US stocks in February register their fastest post-war correction (defined as a 10% fall from their peak). Markets have fallen sharply further in March to date.
The tentative revival in global growth, the US election and indeed most other issues have been set aside as that positive consensus has evaporated. We are once again facing a wall of worry, and as natural contrarians - and keen students of the ways in which media and markets interact - we find ourselves back on more familiar ground.
The humanitarian cost of the outbreak can hardly be exaggerated, sadly. But is the economic and financial mood an overreaction?
We cannot know exactly when global contagion will slow, or estimates of fatality rates converge. The disruption to business seems likely to be significant: having receded from view at the end of 2019, the prospect of recession has moved closer again.
Nor do we take much reassurance from the panicky response of central banks, which in this context seems as illogical as it is likely to be ineffectual.
Nonetheless, the World Health Organization (WHO) reports that contagion in China has been slowing for some weeks. The economic disruption may not last for long - but if it does, we suspect that a recession on this account might be less threatening than usual, not more. And from their admittedly lofty starting point, the falls in stock markets look bigger to us than the likely value of lost business.
Faced with this alarming bolt from the blue, our advice to patient investors is to sit tight and wait for more clarity - but to be looking for opportunities to add to long-term positions, not cut them.
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In this Market Perspective:
- Foreword (current page)
- This too shall pass
- Economy and markets: background
- Important information
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