LONDON/NEW YORK - Shrugging off reams of terrible economic data, plunging oil prices and dire corporate results, world stocks have recouped around half of this year’s coronavirus-linked losses as investors flip over their calendars to bet on a strong recovery in 2021.
The VIX similarly receded below 40 as the last bull market began in March 2009, following the global financial crisis. U.S. and European stock valuations, based on 12-month forward price-to-earnings ratios, are a touch away from pre-virus levels. Those multiples reflect some market participants’ belief that corporate earnings will fully rebound by next year, some strategists say.Meanwhile, the tech-heavy Nasdaq 100 .NDX, the only major index that is not down this year, is just 10% off Feb. 19 levels.
Factories and shops in some European countries, including Italy, France, Germany and Spain, are now open - with some restrictions in place - as COVID-19 infection rates slow. Several U.S. states have resumed activity, while others are considering similar steps. “We believe markets are ahead of themselves price-wise,” said Robert Nobles, chief investment officer at Synovus Trust in Columbus, Georgia. “We still don’t believe there will be a full recovery this time next year.”
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