It’s a Monday but there is optimism in the air. Tentative signs that the coronavirus spread may be slowing, despite the U.S. being set for its worst week so far, have encouraged investors, sending stocks surging higher – the Dow (DJIA) closed 1,627 points – 7.7% – higher. New York reported a drop in new infections and deaths on Sunday and President Donald Trump said there was “light at the end of the tunnel.”
The worst is very much ahead when it comes to the virus but, in our call of the day, Morgan Stanley’s chief U.S. equity strategist Mike Wilson said that for stocks and investors the worst was behind us.
He said bear markets end with recessions and that stocks had reached a good entry point for investors.
“With the forced liquidation of assets in the past month largely behind us, unprecedented and unbridled monetary and fiscal intervention led by the U.S. and the most attractive valuation we have seen since 2011, we stick to our recent view that the worst is behind us for this cyclical bear market that began two years ago, not last month,” Wilson said in a note.
He added that current stock market levels would prove to be good entry points on a 6-12-month horizon.
“Bear markets end with recessions, they don’t begin with them, making the risk/reward more attractive today than it’s been in years; with the twist that the next leg of the bull market could look much different than the last…”
After the Dow Jones Industrial Average (DJIA) closed 1.7% lower on Friday, the index rose 1,627 points – 7.7% on Monday as investors focused on the White House’s positivity that the coronavirus outbreak would soon stabilize. The S&P 500 also climbed 7% and the Nasdaq rose 7.3%. European stocks also made strong gains, along with Asian markets overnight, on tentative signs the virus could be slowing, with the pan-European Stoxx 600 (SXXP) climbing 3.7% and the German DAX (DAX) up 5.8%.
President Trump warned the coming days and weeks could be the toughest in the pandemic but that things would get better. “The U.S. will reach a horrific point in terms of death, but it will be a point where things will start changing for the better,” he said on Sunday evening.
Antivirals and antibody therapies to beat coronavirus are showing promise but the Food and Drug Administration needs to up its pace, according to a former FDA commissioner.
Europe saw signs of hope as Italy’s daily death toll fell to its lowest in more than two weeks and new deaths in Spain fell a third consecutive day. However, the U.K.’s daily death toll rose above Italy’s on Saturday, before coming down on Sunday.
Apple has donated more than 20 million face masks world-wide amid a shortage of equipment for health workers on the front line of the fight against coronavirus, Chief Executive Tim Cook said on Sunday. The technology giant has also started manufacturing 1 million face shields a week.
Oil futures dropped early on Monday after a crunch meeting between Saudi Arabia and Russia was delayed until Thursday, as tensions between the two countries ramped up over the weekend.
British Prime Minister Boris Johnson was admitted to hospital on Sunday as his coronavirus symptoms persisted. Johnson was diagnosed with the virus 10 days ago and has been self-isolating inside his Downing Street residence.
Queen Elizabeth delivered the fifth televised address of her 68-year reign in a bid to lift the spirits of the British people and call for unity through the coronavirus crisis.