Is there anywhere visitors will be welcome this summer?

Do stock markets foretell the future while politicians fudge and economists mumble? No: share prices collectively have a life of their own — driven by herd mentality, weight of money and the available range of investment choices — which indicates little more than the simple fact that what goes up must one day come down and vice versa.

Both the FTSE100 and America’s S&P500 indices lost a third of their value between late February when the pandemic began to look serious and a month later when the rate of virus transmission was at its height. So far, so logical. But since then, both have sustained rallies that defy all public and corporate pessimism. Now, just as shops and factories are reopening, both markets look ‘overbought’ and wobbly again. How should we interpret the graph?

First, London always tends to follow New York. Second, traders on both sides — adolescents in the era of the ‘Greenspan put’ who grew up to be veterans of the 2008 crash — believe ‘whatever it takes’ government interventions will ultimately save the day. Next, institutions have nowhere to put their money except equities, because bonds and cash offer dismal returns. And then there’s the distortion of US indices by the surge of leading tech stocks: not unreasonable for Amazon and Netflix, for which lockdown has been boom-time, yet who can explain a tripling of the price of Tesla?

In the past week, markets have been spooked by new virus cases in Beijing, raising the threat of ‘second peaks’, while the reality of slashed dividends, post-furlough job losses and government incompetence at last seemed to be sinking in. Still some see this change of mood as ‘a bump in the bullish road’ rather than a major reversal.