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S&P500 Futures have 30% reversal insight as coronavirus declared a global pandemic


By Giles Coghlan, Chief Currency Analyst at HYCM

Via Bloomberg

This AM Bloomberg Market's Live Blog highlighted that S&P500 futures latest falls bring the 30% fall figure into play. That would take it back to the December 2018 trade war outbreak low between the US and China.

Now at the start of the year, the question was, 'will bond yields rise and follow equities, or will equities fall and follow the falling bond yields'. It was the mother of divergences that has finally been answered, 'Equities are in deep falls in line with bond yields falling to record lows'. It just took a global virus to decide the case.

How low can we go?

With the World Health Organisation declaring the coronavirus a global outbreak and the speed of the virus spreading. It is a slightly delayed chart, but If you have been following it for the last couple of weeks, you could see that a global pandemic was inevitable.

So, at what point do long term investors step in and grab a real bargain? With the virus outbreak anticipated to be temporary, this could be a great opportunity to buy into some of the world's best indexes at good prices for the long haul. With the peak of the virus still ahead, it seems that new lows are imminent. However, at some point, the market will get ahead of itself and good long term bargains can be had.

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