Axiome June update 2020

In our March update, markets were at the start of a recovery from the Covid-19 sell-off. Our judgement at the time was that markets were likely oversold, and hence rebalancing portfolios towards risky assets where necessary was the best course of action to take.  We were confident that the long-term reward for bearing market risk remained intact, and that the Covid-19 “shock”, like other large shocks markets have faced, will pass. However, we also cautioned that further volatility was a possibility given the dire economic conditions, and we certainly did not expect the recovery in equity markets to be as strong as it transpired.

The global bellwether US S&P 500 Index closed the June quarter at December 2019 levels, only around 10% off the all-time highs it reached in early February this year.  The gain for the quarter was around 20%, the biggest quarterly gain since 1998.

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