Investors may be attaching too much weight to the 2021 recovery, ING strategists said.
All three major U.S. indexes climbed last week despite the unemployment rate rising to 14.7% — the worst since the Great Depression. The coronavirus pandemic cost 20.5 million U.S. jobs in April, according to Friday’s data. However, futures were mixed early on Monday, losing initial gains to trade lower before the open as investors looked toward the global recovery.
ING’s chief international economist James Knightley sees a 7% contraction in U.S. gross domestic product, well below the -4% consensus, which the team said would see the 2020 drop in corporate profits “dwarf” those of the financial crisis. “In uncertain times like these, higher earnings expectations or lower valuations may be needed to keep equity markets supported. We err towards the latter,” they said.After closing 455 points up on Friday, the Dow Jones Industrial Average DJIA, -0.82% was set to open lower on Monday. Dow futures YM00, -0.99% edged 0.5% lower, S&P 500 ES00, -0.67% futures declined 0.6% and Nasdaq futures NQ00, +0.21% were 0.3% down.
Budget airline EasyJet EZJ, -7.56% may have to raise up to £1 billion, Citi analysts said, after the U.K. government said it was looking to impose a 14-day quarantine on people entering the country.
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