With COVID-19 cases once again ticking up ahead of the full onset of winter, it’s worth revisiting the performance of world stocks this year. Year-to-date, global equities across 49 countries as measured by MSCI’s All Country World Index are up nearly 1%. While the bounce-back in the index has surpassed record highs hit before March’s crash, the rally has stalled since the start of September, with the index trading sideways month-to-date. Where do we go from here? That will depend on several factors, including fresh government measures - health and economic - to combat the virus, progress towards a vaccine, and the upcoming U.S. election. Asset manager DWS notes that the VIX volatility index - commonly known as Wall Street’s fear gauge - has moved in tandem with the S&P 500, remaining elevated, rather than in an opposite direction. It said that in addition to the election, an escalating U.S.-China trade dispute and Brexit should serve as a reminder that there is a good reason for equities’ risk premium over government bonds. Fasten your seat belts for Q4!
Chart and commentary by Ritvik Carvalho
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