Stock market headed for more trouble, US markets to take substantial time for recovery and normalcy


Words have been going around in parts of Wall Street that the normalcy of the economy and the market is a doubtful notion even after the passing of the coronavirus pandemic. With a change in the overall practices and psychology of consumers, the global economic recovery would be a rough and difficult journey. Even after the disease is brought to control, consumers would be more cautious and have behavioral changes about the efforts of containing the disease and the lockdown situation, all across the world. This would lead to a slow and gradual economic recovery with difficult times for the stock market ahead in 2020.

In this context, Anwiti Bahuguna, head of multiasset strategy at Columbia Threadneedle, said in an interview, “It’s too soon to tell, but I think it’s going to be a slow grind higher for markets. I’m trying not to stay fixated on the economic path, all I can say with confidence is markets will be very volatile in the short term.”

The equities market has already been struck hard by the devastation of the US economy. Along with that, there has been a record surge in the U.S. weekly jobless claims with an ugly employment report for March released on Friday. Broad-based S&P and Nasdaq Composite COMP, 4.649% closed 1.5% lower on Friday, while the S&P 500 along with Dow Jones Industrial Average continue to face losses in the second quarter.

While huge research efforts are being made to have an idea about the face of the economic recovery and normalcy, China has been watched by investors to notice and understand consumer trends in a recovering market.

While traffic congestion is almost down to half even after the removal of lockdown in some of the major Chinese cities, people are still avoiding crowds and places like movie theatres in fear of a second wave of infections. Along with the resuming of businesses and factories, the economy is gradually making a turnaround, but the progress is slow and the fear in people would take a lot of time to subside. While analysts keep eyeing the market trends and the situation of US jobless claims, Consumer and producer-price inflation for March might also threaten deflation and cut out the growth slowdown.