Markets rebound, “time to start adding to equity risk“

Markets mostly rebounded on Friday.

The S&P 500 surged 9.3 percent and the STOXX Europe 600 jumped 1.4 percent.

Asian stocks were mostly lower though. The Nikkei 225 plunged 6.1 percent while the Shanghai Composite fell 1.2 percent.

Investors were encouraged by US President Donald Trump's declaration of a national emergency, freeing US$50 billion to tackle the COVID-19 pandemic.

While economists are seeing an increased likelihood of a recession, many think that markets could be close to a bottom.

“If it indeed is declared a recession, it will really only be a three-month drop in activity,” said Barry Knapp, Ironsides Macroeconomics director of research.

“I don’t think this is a prolonged sort of downturn,” said Lori Calvasina, chief US equities strategist at RBC.

“We are now trading slightly below our downside case on the S&P 500 and believe it is time to start adding to equity risk for longer term investors,” analysts led by Michael Wilson, Morgan Stanley’s chief US equity strategist, wrote in a Thursday note.