Despite the disastrous impact of the pandemic, the COVID-19 on the economy, employment, finance, personal and corporate income, the Stock market has made a dramatic catch-up since his recent collapse on a global scale.
The economic data are still poor. Examples. In march, a record loss of retail sales (-8,7 %) in the United States, including a 25% decline in auto sales. And a historical perspective of the industrial production (- 5,4 %).
Among us, the Bank of Canada expects an annualized drop between 42 % and 73 % of the canadian GDP in the second quarter.
The profits of most companies listed on the Stock market will fall sharply.
That’s not a problem, since the stock market bottomed out on Monday 23rd of march, the major north american indices rebounded from 25% to 29 %, and this, in the space of just 16 daily sessions.
In this time of war against the COVID-19, it’s crazy braque such an increase in stock market !
This gives the impression that the Exchange operates in a parallel world.
Because, you should know that during this short period of time, the news did not cease to be increasingly poor as the number of deaths related to the COVID-19 was climbing endlessly, and that we don’t see even glimpses of the famous peak of the health crisis of the sars coronavirus.
To try to justify this rapid recovery of the stock Exchange, and the optimism of the speculators, forgiveness, active investors, analysts of brokerage firms refer in particular to the numerous and costly financial assistance measures put forward by the governments to allow individuals and companies to possibly escaping from the crisis without leaving their skin.
Up to now, it is more than 5000 billion dollars that governments have injected in measures of financial survival.
It must be said that the massive intervention by central banks (lowering to near-0 % rates, the respective directors and by acquiring massive amounts of bond assets on the financial markets) have also reassured the large investors, such as mutual funds, pension funds and financial institutions.
This is obviously not all analysts of brokerage firms who see in the bounce of the current Stock market a solid foundation. And therefore, many expect that the Stock market comes back to test its recent lows.
Some call that a rebound of the stock Exchange “trap door” stock market aimed at convincing the mass of investors that the nice weather has returned.
We must never lose sight of the fact that in Exchange, every transaction involves a seller (who found it appropriate to liquidate its shares) and a buyer (who thinks to make a good shot), and this, regardless of whether the trend is bullish or bearish.