Six Park co-CEO and co-founder Pat Garrett speaks to The Motley Fool about Australian market conditions during the COVID-19 pandemic.
The S&P/ASX200 Index has gained more than 20% after current bear market lows were reached on 23 March.
Pat Garrett tells Ali Cain that he expects tensions between the medical and corporate worlds will drive markets in the near term.
“The former sees major benefits in leaving lockdown measures in place and the latter wants the fastest route back to business as usual. Where action and policy land across this spectrum is likely to be the largest driver of share markets.
“So, we remain in a situation where sentiment not data is driving the market. Investors need to know what policies will be adopted and what containment data says about COVID-19’s impact, which could take months to play out. We also need to understand potential downsides of US economic interventions. Expect more wild swings in coming weeks as it’s going to take time to get stability on how to interpret data.”
Garrett notes bear market rallies can make investors feel the bottom has come and gone when it hasn’t.
“Rebounds, like falls, tend to be highly unpredictable. Market stability, even if that means new lows, will start to return when there is sufficient clarity to assess whether a short-term recession or a long-term depression is the most likely outcome. There simply isn’t enough data yet to make that assessment. Typically, the bottom is when you least expect it.”
This article also features commentary from Bell Direct and Integral Private Wealth.