Until recently asset markets had remained resilient with the narrative of local rather than national lockdowns helping to support expectations. The announcement of national level restrictions in France and Germany and concerns that other countries may follow suit have now refocused markets on the downside risks, which can explain the sharp swings in European stock markets in late October. While our base case is that activity won’t fall as far as in April, investors should be wary of the potential for a prolonged dip through the winter with potential implications for corporate earnings.

% from baseline, average of “Retail and recreation”, “Workplace” and “Transit” scores