Equities Care About Vaccines, Not Second Waves
(2 min read)
Numerous countries are experiencing second waves of COVID-19 infections – not that you would know from their equity market performance. Take the US. Its second wave (or acceleration of the first) started towards the end of May and ended in early July. Over that period, stocks were still up around 6%. Admittedly, there was a short-lived correction of 7%, but that was considerably smaller than the 34% decline seen around the first surge in cases (Chart 1).
Outside of the US, a number of countries are experiencing second waves from Poland to Hong Kong to Australia. Yet their equity performances have not been too different to countries without second waves. On average, second wave countries have seen their stocks rise 4.5% over the past two months. This compares to 5% for countries either still in their first wave or having flattened the curve. Therefore, you would be hard-pressed to discern whether a country is experiencing a second wave from relative equity performance.
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