A V-shaped recovery is impossible unless the rebound in consumer spending is V-shaped which is unlikely, according to economic experts.
“Given China is the birthplace of the pandemic, it is likely a canary in the coal mine for the rest of world. In March, retail sales were down 16% compared to March 2019. They are a figure to monitor closely as China keeps reopening its economy,” said Pau Morilla-Giner, Chief Investment Officer at London & Capital.
“What could the recovery look like, then? Like a very elongated Nike’s swoosh sign.
“So Are Markets Out of The Woods? No. Markets rarely rally in a straight line.
“From a behavioural perspective, market movements represent a continuous tug-of-war between the bulls and the bears: after the optimistic buyers of the initial dips have responded to the low prices and bought, the pessimists find the new, higher prices unsustainable and engage in another round of selling. And so it goes on for a while.
“In next few weeks/months, we will probably see other Sell-Off waves. Likely causes of this include a relapse of COVID-19 post easing and painful realisation of just how badly affected the real economy has truly been.”