Don't Forget the March Crash

Editor's Views: What are soaring markets telling investors about the economic recovery from the coronavirus crisis? And why a well-run fund company often produces good funds

Holly Black 12 June, 2020 | 11:27AM

editor

The Nasdaq hit a new record high this week; tech stocks are soaring. That sentence could have been written at any point within the past 10 years and not looked out of place. Yet it is strange to write it when we are still very much in the grip of a global pandemic, with nations across the world still in various states of lockdown and the economic repercussions yet to fully hit. That this record was hit in the same week it’s revealed the UK economy contracted by an unfathomable 20% in April serves to highlight, if nothing else, that the economy and stock market are very different beasts.

The stock market is, at its core, driven by sentiment – it reflects what investors are thinking and feeling. That markets across the globe have already started their recovery in earnest tells us investors are feeling optimistic and thinking a vaccine for coronavirus will be found. That the tech-dominated Nasdaq is at new highs tells us investors are feeling more reliant than ever before on technology – whether it’s family meet-ups via Zoom, remote working and schooling over Microsoft’s Teams, or contactless payments made with a single tap – and that they believe this trend isn’t going anywhere.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Holly Black  is Senior Editor, Morningstar.co.uk

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