Traders work on the trading floor of the New York Stock Exchange.
The stock market rally from March lows hits a short-term valuation test, according to BCA Research, and government bond yields will signal when it is time to sell.
Despite the uncertainty and risk associated with the Covid-19 pandemic, global equity markets have been in danger since the coronavirus-induced crash in March. Despite the pandemic, the S&P 500 has risen by more than 10% since the beginning of the year and has increased by around 59.5% from the lows in March.
The Europe-wide Stoxx 600 has still fallen by almost 7% since the beginning of the year, but is around 39% higher than its Covid low. Shares got an extra boost this week when Moderna became the second pharmaceutical company to declare its coronavirus vaccine was highly effective at preventing Covid-19.
In a research note on Thursday, Dhaval Joshi, Chief European Investment Strategist of BCA, highlighted that since the beginning of 2018, a rise in the 10-year US Treasury benchmark return has thrown four shivers over the stock market: February 2018, October 2018, April 2019 and January 2020. “