A personal view from Ian Stewart, Deloitte’s Chief Economist in the UK. To subscribe and/or view previous editions just google “Deloitte Monday Briefing”.

One of the more remarkable features of the Covid-19 crisis has been the yawning gap between collapsing economic activity and rising equity markets. Investors had a torrid start to the year with the pandemic driving down risk assets and global equities by almost a third between by 23 March. But since then equities have staged a remarkable comeback and the global market is now down by just 1% so far this year.

Investors seem to have decided that, despite the collapse on growth, extraordinary monetary and fiscal will, eventually, save the day.

In the developed world, equity prices have, to varying degrees, mirrored national progress in the management of the Covid-19 pandemic. Danish stocks have been the best performers, benefiting from an efficient response to the virus, and are up 11% this year. South Korean and Swedish stocks are up 7% and 4%, respectively.

Despite the seriousness of the pandemic in the US its equity market has done better than most, returning 5% this year. This outperformance reflects, in part, the outsize contribution of technology stocks to the US index. The boom in remote working, online retail and all things digital has made tech stocks the darlings of investors.

Equities in other developed markets have yet to recover their earlier losses. Greek and Spanish equities are the worst performers in Europe, down 27% and 21%, respectively, partly reflecting the disruption to the tourist sector which make such a contribution to both economies. Despite a strong rally since March, UK stock prices are still 17% below their levels at the beginning of the year.

Shares in businesses in the travel and leisure and oil and gas sectors have suffered large declines. Banks have been even worse hit on concerns about the impact of low or negative interest rates and of corporate insolvencies on bank margins. UK bank shares have fallen 45% since the start of the year.

Among the ‘FAANG’ technology stocks – Facebook, Amazon, Apple, Netflix and Google – Amazon is the best performer returning 73% this year. Netflix has seen a sharp rise in subscriptions over the lockdown period, returning 55%. Apple, which reported a pandemic-defying rise in second-quarter sales, also returned 50%. But none of these match the performance of teleconferencing company Zoom, whose share price has quadrupled this year.

Pharmaceutical and biotech stocks have also done well, especially companies that have made progress on Covid-19 vaccines. Shares in Astrazeneca, which is working on the Oxford University vaccine, have returned 14%. That is overshadowed by the returns from small biotech companies, such as Moderna and Inovio, with promising vaccine programmes. Inovio’s share price has seen a six-fold rise this year. Moderna’s has almost quadrupled.

China was first into and out of the pandemic. Chinese equities have done well, returning 12%. But elsewhere emerging market stocks have seen significant losses on concerns about the impact of the pandemic.

Shrinking activity and pervasive uncertainty have hit commodities. The S&P/Goldman Sachs commodities index is down by almost a third this year, in large part because of the collapse in the oil price. Industrial metals have recovered their losses and are up 1% this year.

Elevated uncertainty has boosted ‘safe-haven’ assets, especially precious metals. Gold, which hit a record high last week, is up 33%. Silver prices have soared too and the supposedly safe yen and Swiss franc have made gains. After initial gains in March the dollar has lost ground as the scale of the pandemic and the damage to the US economy have become apparent. The euro has been the best performer among major currencies and has risen 6% so far this year.

Among alternative investments, Bitcoin has risen by 64% since January. Investors seem to be treating it as a better store of value than many traditional safe-haven assets.

The desire for safe assets can also be seen in the government bond market, with US and UK bonds delivering returns of 10% this year, well above the gains to equities or corporate bonds.

For some higher income households the lockdown has raised levels of savings. Some of this cash seems to be finding its way into the market for high-end goods and collectibles. In May, Sotheby’s auctioned a pair of Michael Jordan’s old Nike Air Jordan 1s for $560,000, a record price for second-hand trainers. Christie’s recently sold Roy Lichtenstein’s “Nude with Joyous Painting” at $40.5m, well above the estimate. Agents report a rise in luxury boat sales and growing demand for country retreats. Online sales have supported fine wine prices, with the Liv-ex index of the 100 most sought-after fine wines down by just 2% this year. Luxury brands such as Chanel and Louis Vuitton have also raised the prices of some handbags by as much as 25%.

Supported by a stamp duty holiday and pent-up demand, UK house prices have, according to the Nationwide, recouped earlier losses and are back to January levels. The pandemic seems to have boosted demand in desirable rural ideas. Property listing site Rightmove has reported that the number of city residents contacting estate agents to buy a home in a village has more than doubled this summer.

Buoyed by easy money and fiscal expansion risk assets have rallied into one of the deepest downturns on record. Out in the real world the talk is of second waves of the virus and of unemployment, insolvencies and uncertainty. Whether risk assets continue to make gains in such an environment depend on policy and the effective management of the virus.