The Bull & The Bear: David Rosenberg and Brian Belski on where the markets are headed next
Amid the pandemic, European markets post their worst quarterly numbers since 2002.
By the close of the last auction, the pan-European Stoxx 600 index collapsed by 23.03% YTD.
Spain’s IBEX 35 experienced the largest drop of any major European index, shedding 28.94%, posting its worst quarter-on-record. Italian FTSE MIB there was also a decline of 27.46% and an update of the quarterly historical minimum.
It is noteworthy that it is these two European countries that have been hardest hit by the coronavirus outbreak.. Confirmed cases in Italy currently exceed 105,000 with over 12,000 deaths, while Spain has confirmed more than 95,000 infected and over 8,000 deaths.
French CAC 40 fell 26.46% in the first quarter. British FTSE 100 and german DAX fell by 24.8% and 25% respectively.
In the USA, meanwhile, Dow and S&P 500 on Tuesday showed their worst performance in the first quarter, sagging by 23.2 and 20%. The Dow also posted its worst quarterly report since 1987, while S&The P 500 Records Its Most Significant Quarterly Loss Since 2008.
In recent weeks, governments and central banks in Europe and countries around the world have taken action to bolster their economies.
The ECB recently launched «Pandemic Emergency Procurement Program» for 750 billion euros in an attempt to offset economic damage.
Investors are closely monitoring whether stimulus measures are delivering the desired economic impact in the eurozone. They will also be on the lookout for any sign of a slowing pandemic, although the number of cases is growing rapidly and daily.
«As we noted, monetary and financial stimulus may not be enough to revive global growth if countries around the world remain quarantined for a few more months.», – said Charalambous Pissouros, Senior Market Analyst at JFD Group.
«Thus, investors can once again abandon risky assets in favor of safe investments.», – he added.
Fundamental investors could be hit hard by continued market volatility, says Amit Lodhi, portfolio manager at Fidelity International Equities..
«In the medium and long term, when the picture stabilizes, we may find ourselves in a situation similar to that in 2009.», – considers Lodha.
He also noted a possible repeat of the Marshall Plan, an American initiative designed to help reanimate the European economy after World War II.. Lodha expected a number of major economies to deploy their own “Marshall’s plans”, to start recovery.
«I will repeat what can be called one of the basic principles of the investment philosophy of my colleague Anthony Bolton – «most money in the stock markets is made when things go from very bad to bad»», – said Amit.