Market Update from the Global Asset Allocation team – May 2020

In April, sentiment was reinvigorated and risky assets got some much-needed reprieve after the worst meltdown since the global financial crisis. Investors welcomed some tentative signs that the COVID global infection curve may be flattening, which sparked discussions about re-opening the economy. Meanwhile, unprecedented support measures unleashed by both monetary and fiscal authorities also emboldened the risk-on trade and propelled equities higher during the month. At the same time, investors were largely unphased by the raft of grim economic and corporate earnings results that have revealed the extent of the virus-induced economic destruction. As a result, caution is warranted after the historic rebound given both lofty valuations and the lack of visibility on the path forward.