Sell in May and go away is a common adage in the markets.
But the stock market, like everything else, has been disrupted by the coronavirus outbreak this year.
Stocks were at record highs at the start of the year, only to be sent reeling as Covid-19 cases started rising dramatically across the world. Markets bounced back in April, with the S&P 500 rallying 25% from mid -March lows.
As investors approach the second half of the year, they are keen to determine if the recent recovery will be fleeting or a harbinger of a rally later in the year.
Some of the key factors driving optimism in world equity markets are as follows -
While the month of May could become the crucial period to assess the quality & quantum of this economic rebound as economies start to reopen, analysts warn there are still a few red flags to watch out for –
Given all the countervailing forces at play, investors are finding it hard to call the near-term direction for markets.
"At this point the market has rallied about as much as it is going while we are waiting for the pace of the reopen & the risk of a second wave. Markets have priced in a fair bit of the good news & will need to see more confirmation before we are able to go any further," said Jurrien Timmer, Director of Global Macro, Fidelity Investments.