Are rising Covid-19 cases about to crash stock markets again?

Linda J. Dodson

Iain Barnes, of wealth manager Netwealth, said central bank measures to support stock markets have led to a positive longer-term outlook for stocks.

Nevertheless, there will be considerable volatility along the way, particularly in the coming months as cases rise and markets digest the news, he noted. 

He said investors should watch American stock markets closely for signs that consumers are less willing to spend, which may see American stocks perform worse than other regions.     

The November presidential election adds a further complication, according to Mr Barnes, as the virus could lead to some less market-friendly policies from resurgent Democrats.  He recommends investors stagger any fund or stock purchases to help iron out any volatility. 

Graham Bishop, of investment manager Heartwood Investment Management, said governments may be less willing to implement full lockdowns in the future in order to limit economic pain.    

He has been replacing some stock and government bonds with strategies that offer better risk/reward payoffs, such as convertible bond funds, which have characteristics of both stocks and bonds, as well as funds that profit when volatility goes up.  

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