After the sharpest stock sell-off since March, what's next?

1) second waves of infections appearing in several US states, such as Texas, Florida and Arizona, after re-opening;

This single-day decline might well be part of a larger pullback in the weeks ahead - corrections in excess of 10 per cent are not infrequent and investors could take some time to re-calibrate valuations to evolving market risks. At this point, however, there are some grounds to be hopeful that the economic and market impacts of new waves of infection would be relatively contained versus the first peaks of the pandemic.There is a higher level of preparedness and, at the same time, lower political appetite to re-impose full shutdowns.

Therefore, at this point we see limited signs that the equity market would revisit the levels of the March bottom, which were then reflecting far greater levels of uncertainties.

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