FNArena’s Weekly Insights – April 20 2020

Dear time-poor reader: what does the future look like and why are so many cheap stocks still looking so… cheap?

Now That We Had That Rally…

By Rudi Filapek-Vandyck, Editor FNArena

The official mantra says financial markets are forward-looking.

The heavy sell-off that pulled the ASX200 some -38% from its all-time record high in February has thus been swiftly followed up by a 25% rally. This doesn’t necessarily tell us anything about what follows next.

I note a number of financial market analysts and commentators who had been bullish in recent weeks have now turned a tad more cautious, taking profits while recommending their clientele does the same.

In simple terms, global equities have clawed back more than half of all the damage that was done upon the break-out of the covid-19 pandemic and the general realisation that a deep global recession is now taking place.

The driver behind this claw-back was a V-shaped recovery in investor optimism, but economies and corporate profits won’t be bouncing equally as quickly.

Not in most cases.

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