There is more devastating data waiting in the wings

JOHANNESBURG – Financial markets over the globe continued to recover strongly during last week. Despite horrible US unemployment data during April, where employers had cut jobs by a record 20.5 million to bring the US unemployment rate to 14.7percent, the highest since the 1930s, equity markets just bulldozed into a buying spree.

The Dow Jones Industrial index had broken easily through the 24000 point level on Friday, whereas the S&P500 started to test the 3000 level again.

The Dow had lost 37percent of its value from its record high of 29551points on February 13, 2020, to as low as 18591points six weeks later on March 23. Up to its opening on Friday, the index already had recovered by 29percent. This typical V-format recovery is well known in equity markets just after a black swan incident, like after the September 11, 2001, twin towers attack in the US and the 2009 sub-prime crisis.

Most other equity markets followed the US over the last few weeks with strong increases. On the JSE, the all share index (Alsi) ended Friday on 51003points. The index had lost 36percent from its highest point this year of 59001points on January 17 to 37963points on March 19.

Since then, the Alsi had recovered strongly again by 34.6percent to the close on Friday.