Markets fell on Thursday.
The S&P 500 fell 0.2 percent, the STOXX Europe 600 plunged 2.1 percent and the Nikkei 255 fell 0.5 percent.
The surge in COVID-19 cases dominated concerns, especially in Europe, where France, Germany, Italy, Poland and the Netherlands all reported record high new infections on Thursday.
Dr Hans Kluge, the head of the World Health Organisation Europe office, said death rates across the bloc could be “four to five times higher than those in April” by early next year if the pandemic is not consistently taken seriously.
However, US stocks managed to recover much of their early losses despite a report showing that claims for jobless benefits climbed 53,000 to 898,000 last week.
Still, Mark Hulbert at MarketWatch said contrarian thinking suggested that more weakness could lie ahead as investors have been extremely bullish lately.
“To put the timers’ current exuberance in perspective, consider the Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects their average recommended equity exposure. Since 2000, 99% of the HSNSI’s daily readings have been lower than where it stands today,” he said.
Indeed, Cole Smead, president and portfolio manager at Smead Capital Management, told CNBC that such bullishness has pushed US equity valuations to become a “total nightmare”.
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