Any renewed market setback on concerns of a second wave of coronavirus would be an opportunity to add cyclical stocks, said Christopher Wood, global head of equity strategy at Jefferies.

Wood gave two reasons for his conviction. The Hong Kong-based strategist believes that the world is nearer to the end of the Covid-19 pandemic than before, in line with the Farr’s Law. Farr’s Law of Epidemics believes that infectious disease cases rise and fall following a bell-shaped curve.

Wood said the fears of any renewed downturn will lead to further monetary and fiscal stimulus.

“...I will tell markets have become concerned that another US fiscal package will not be agreed before the November 3 election date because of the Supreme Court issue following the death of associate justice Ruth Bader Ginsburg last Friday.... if market action is bad enough, the politicians will still come together quickly,” said Wood.

While the consensus is not expecting any more Fed action until the December FOMC meeting, Wood believes that there is a scope for inter-meeting action by the US central bank if the market action is violent enough.

“Remember it is the Fed which follows the markets, not the other way round. Still what usually triggers the Fed to move is rising credit spreads. But so far the spread widening on high yield corporate bonds has not been that dramatic,” said Wood.

The US central bank had kept interest rates unchanged at near zero in its September meeting.

Wood believes that the pandemic is in the process of burning itself.