In light of the ongoing COVID-19 pandemic, global markets continue to face several uncertainties. Markets seem to have been comforted by massive stimulus programmes; which have been larger than we’ve ever seen before. Despite strong responses from governments, this is one of the fastest recessions that appears to be coming. With a recession upon us, Jonas Thulin, Erik Penser Bank, believes that it is already clear that much more needs to be done. There is a large difference in policy responses between Europe, the US and Asia. The US has pursued a more expansive fiscal and monetary policy, with the largest quantitative easing as a percentage of GDP ever experienced. As a result, consumption is rebounding in the US with retail sales starting to grow again. However, Jonas Thulin believes that Europe is lagging behind. Markets seems to be concerned with the lack of a common fiscal policy framework in Europe. Given that the 2008-09 global financial crisis produced deep political paralysis and nurtured populist leaders, we can expect that this crisis will cause political as well as economic shifts. The problem is that this crisis is not only a demand shock but a supply shock for which expansionary fiscal and monetary policy may not be enough.

This text is a summary of our event ‘Coronavirus, Markets and Behavioural Finance’, hosted in cooperation with Erik Penser Bank on 29 April.