Despite the mass emigration of funds, and the evaporation of more than 11 trillion dollars, amid the worst series of losses for global stocks since 2008 financial crisisHowever, the bottom has not yet been felt.
The sell-off in the MSCI ACWI Index has drastically lowered corporate valuations across the United States and Europe, but strategists at Morgan Stanley and Citigroup expect stocks to fall further amid concerns about rising inflation, tightening central banks and slowing economic growth, especially in United State.
No survivors from the current sell-off are on the horizon, as money flees from all asset classes and investors scramble to exit major companies including Apple and Bank of America, according to Bloomberg.
The historically important technical levels for the S&P 500 index show that the index has room to decline by about 14% before reaching key support levels, while the share of companies that have so far recorded their lowest level in one year is still far from the figure recorded during Economic growth fears that hit stocks in 2018.
“Investors continue to trim their positions, particularly in technology and growth stocks, but the selling should heat up significantly to reach a potential market bottom,” said Comdirect Bank strategist Andreas Lipko.
On the flip side, some say pullbacks have already created valuable opportunities across sectors including commodities and even technology, which are valued on future earnings and, therefore, are generally avoided during periods of high interest rates.
For his part, says Goldman Sachs strategist, Peter Oppenheimer, that it is time to “buy the bottom”.
Even as growth concerns mount, the focus on inflation at the Federal Reserve and other central banks means that investors can no longer count on the monetary elixir that helped keep the long-term bull market going.
The MSCI ACWI Index has fallen for six consecutive weeks, the Stoxx Europe 600 has fallen 6% since late March, and the S&P 500 has more than doubled.
Here are some key metrics that illustrate the potential downside of stock markets.
The S&P 500 is still about 14% above its 200-week moving average, which was the level that was previously the bottom line during all major bear markets, except for the tech bubble and the global financial crisis.
Canaccord Genuity strategists say there could be more dips on Monday on margin selling after another red week for the US benchmark.
Despite all the recent declines – the S&P 500 is down more than 13% from its March 29 high – indicators of stress have also not been at the levels seen during similar recessions. Less than 30% of the companies that make up the index scored a one-year low, compared to about 50% during growth concerns in 2018 and 82% during the global financial crisis in 2008.
In addition, the 14-day RSI indicates that the S&P 500 has not yet bottomed. The Stoxx Europe 600 index entered the oversold territory last week.