I think it's fairly safe to say we're all battling through what's probably going to be remembered as one of the worst Easters in living memory. With holiday travel restrictions, beach bans and a bar on having extended family over for lunch, it's certainly shaping up to be a very different affair (although still one to remember) to what most of us are used to at Easter.
But as we finish yet another week of lockdowns, it's striking how no one seems to have told the ASX what a bleak time it is!
The week before last, the S&P/ASX 200 Index (ASX: XJO) had its first week of positive moves since the 'corona crash' began in mid-February. That trend continued last week and again this week.
So why are the markets seemingly so happy in this difficult time? I wouldn't blame any investor for being a little confused – it's not like the news cycle has turned positive….
Why the ASX is moving upwards
Well, I think one reason is the unprecedented intervention of governments around the world into their own economies.
Here in Australia, the government is pouring literally hundreds of billions of dollars into our own economy through various payments and tax breaks. That's in conjunction with the Reserve Bank of Australia entering the bond market in its own version of Quantitative Easing (which has never happened before).
The US is also currently printing an unprecedented and frankly, incomprehensible amount of money to pump into the American economy (people are calling it QE Infinity).
Remember, since interest rates are at zero virtually around the world, there aren't many alternatives out there to invest capital right now apart from share markets.
I also think the markets have stabilised (having somewhat priced in the short-term effects of this economic shutdown) and are now waiting for further buying or selling signals. These could come in the form of company earnings, a dramatic increase or decrease in the number of coronavirus cases, or some other news of significance.
So if you're confused about why the markets are moving the way they are, I don't blame you! But there are forces outside just the coronavirus at play here, and that's why things seem a little eerie and strange right now.
But as always, I think if you hold your nerve, keep your shares in the market and invest here and there where you can, things will turn out alright in the long-run!
