April 4, 2022
As bad as results have appeared for investors in global stock markets, its worse in other markets, and that may be enough to keep the equity rebound going for now.
After the initial shock of the Russian invasion of Ukraine, share prices have recovered in record time. That followed their resistance to successive waves of the coronavirus pandemic since 2020. Now, theyre refusing to be undone by ominous portents in bond markets that a global recession is on the horizon.
Resilience is found in the “buy the dip” pattern in trading. But the wall of worry that stocks have to climb right now is getting higher and higher as rampant inflation squeezes demand, economic growth slows and central banks look to finally end the era of excessively loose monetary policy.
While all that means corporate profits are poised to take a hit, stocks may still have a case, not least because the alternative options are scarce.
The rebound we saw in March supports this view. While Q1 was the worst for share prices since the outbreak of the pandemic, March actually saw a recovery. In fact, a gauge of volatility in euro-area large caps shows that the war-induced slump is proving so far the shortest market rout this century.
OneProSpecial Analyst
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