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Global equities have recovered swiftly from the COVID-19 pandemic with the S&P 500 climbing above 3000 points for the time since late February. The rally has left major equity indexes fully valued on some measures, according to UBS. 

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Key quotes

“The S&P 500 currently trades at 24.2x our estimate of 2020 earnings and 18.9x 2021 earnings, compared to the 20-year average trailing price-to-earnings ratio (P/E) of 17.9x, and the 20-year average forward P/E of 16x.” 

“For markets to catch a broad ‘second wind’ investors will need greater confidence that a second wave of virus infections will not lead to renewed lockdowns. In particular, in this scenario we would see ample room for further gains in economically sensitive parts of the market which are lowly valued and have underperformed through the crisis so far.”