In recent years equity markets have been driven more by central bank largesse than by corporate profit performance. With bond yields close to record lows — in both real and nominal terms — investors have charged into higher-yielding risk assets with gusto. Still it behoves us to keep an eye on the underlying earnings picture.
China looks to have the Coronavirus (COVID-19) under control. The rate of daily infections has been on a clear downward trend since the start of the month, suggesting the initial measures to quarantine areas were largely effective. As knowledge and understanding improves, it seems highly unlikely this is a temporary lull, even if economic disruptions surrounding the outbreak become more prolonged.