FXTM: Stocks surge as COVID-19 death rate falls; 'bumpy road ahead'
Global stocks are higher again as the death rate for the COVID-19 virus falls, although there could be a “bumpy road ahead,” said Hussein Sayed, chief market strategist at FXTM. Futures for the Dow Jones Industrial Average are around 766 points higher ahead of the open on Wall Street. This follows a 7.7% gain on Monday. European and Asian stocks also rose. “The world has finally seen a glimpse of light at the end of this dark tunnel,” Sayed commented. “The coronavirus outbreak is starting to level off across many countries and cities. Looking at the new daily infected cases and death toll from Spain, Italy, Germany and France, all of those countries seem to be heading into a downward trajectory.” Further, the strategist pointed out, the governors of New York, Louisiana and New Jersey have pointed to cautious signs that the outbreak may be starting to flatten. “It saddens me to use a ‘death’ indicator as a financial market tool, but that’s what’s driving investors at the moment,” Sayed said. “The declining number of deaths registered due to COVID-19 suggests that we are winning the fight against this horrible virus. Total death rates had decreased from 13% at the start of April to 7% yesterday. That’s the first time we have seen a single-digit number since March 14.” Still, Sayed offered some caution about the recovery in stocks, saying it’s still hard to gauge the damage to the global economy and corporate earnings. “Without proper treatment or vaccination, lockdowns could be reimposed and the global economy will then continue to suffer,” the strategist said. He later added, “Hence, the road ahead won’t be a smooth one, especially as investors still need to digest a mountain of negative economic data and possibly many bankruptcies. In my opinion, the best-case scenario is likely to be a U-shaped recovery and not a V-shaped one….For now, let’s hope that we beat the coronavirus and it becomes just a memory of the past.