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The S&P 500 has rebounded by around 25% since the March lows, with around half of that rally coming last week, the biggest weekly gain since 1974. This has prompted the question of whether the low is in for stocks, Mark Haefele from UBS informs.

Key quotes

“We think the market is currently pricing in close to our central scenario, that severe restrictions to limit the spread of the virus are lifted by mid-May in Europe and by early June in the US, but they are partially re-imposed later in the year.” 

“We think further upside for the broader equity markets would be better supported once we have more evidence that stimulus measures are working, we get greater clarity about the “exit strategies” governments are beginning to develop, or a medical breakthrough takes place.”

“We cannot rule out our downside scenario, in which repeated virus outbreaks prove difficult to control, leading to severe lockdown restrictions being re-imposed intermittently. We would expect further equity losses in this scenario and estimate the S&P 500 could finish the year at 2,100.”

“We believe there are plenty of reasons to stay invested, given the unprecedented speed and scale of the support measures announced by governments and central banks, as well as signs of containment of the virus in Europe.”