Natixis IM Solutions urges caution on equity markets

  •   04/05/2020 - 10h59
  •   DEHOUI Lionel

Today, the world is almost at a standstill due to the spread of the new coronavirus. The world economy seems to be on the brink of collapse. From small to large companies, this is an alarming observation in terms of activities. Investors are reluctant to buy shares in a company at this critical time. As a result, equity markets are taking a hard blow. But on April 30, 2020, the financial market is witnessing something else entirely. The hope raised by certain coronavirus treatments is upsetting all the figures. For example, the European and American markets are rebounding with more than 2%. The end of the tunnel promises to be reassuring. But while it is true that opportunity is the thief, Natixis IM Solutions nevertheless urges caution.

Natixis IM Solutions urges caution on equity markets
Image copyright: AFP

The equity market recap

As previously announced, life is resuming on the markets of Europe and America. Indeed, the S&P 500 and the Stoxx50 indexes recorded increases of +31% and +26% respectively. In addition, the stock market indices of Microsoft, Facebook and Qualcomm performed well. Social networking giant Facebook reports some stability in its advertising revenue. Tesla, meanwhile, has secured its first quarter.

The US Central Bank (the Federal Reserve) has maintained its monetary policy, but calls for more effort to stimulate the economy. The European Central Bank finds itself in the heat of the recession caused by the gross domestic product (GDP) statistics. In addition, there is stability in the yields (0.6%) of the US 10-year treasury vis-à-vis the German one (-0.5%). The oil market is also recovering.


Natixis IM Solutions warns

The French corporate bank Natixis IM Solutions calls for caution regarding the recovery of the equity markets. Indeed, the financial services specialist fears the worst. For him, the current market levels and valuations are incurring future risks related to this health crisis.

However, current levels could hold for a long time due to the hope given by the treatments and the scale of the rally. Nevertheless, the French active ingredients giant is already anticipating the post-health crisis period, which could turn out to be more complicated.


The asset manager monitors reopening measures

The asset manager does not let himself be distracted, he keeps an eye on the takeover policies around the world. He carefully examines these measures to see how they can be implemented while limiting the damage of the virus. To achieve this, Natixis IM Solutions is relying on the predictions of lighter containment and encouraging news regarding treatments.

Indeed, for Natixis IM Solutions, it is not just a question of getting the economy back on track. Thus, the group is calling for stimulus measures that can contain the effects of the pandemic on the economy. Otherwise, we would see the worst. It will also analyze any forecasts made for the bottom line as it is revised downwards. The giant also adds that current valuations show a very low " "E " (eaening).


About Natixis IM Solutions

Created in 2006, the French group Natixis IM Solutions is a corporate, management and financial services bank. It operates in the field of specialized financial services, savings and corporate banking. The company is a subsidiary of the BPCE group (Banque populaire caisses d'épargne).