US equities recovered a little on Friday as the S&P500 ultimately closed 1.3% higher after a choppy session. Europe ended up as well. Nerves around a second wave persists in the background: the US Center for Disease Control warned the US that it is ” not out of the woods ” with Covid-19, urging against a return to normal as states reopen.

With Covid-19 on everyone’s mind after the weekend headline deluge, bullish sentiment will continue to get tested as the uptick in case counts represents the first real confidence test for the equity market. There is a lot of good news on the price. Central banks have indicated they are done for the time being, so perhaps fundamentals will begin to reassert themselves.

It is easy to see how that could happen, especially given the ongoing fear of what lies ahead when it comes to earnings and the macro outlook. Bankruptcy headlines and the dreary unemployment outlook continue to provide that stark reminder of how ‘ Main Street’s ‘ issues can quickly become ‘Wall Street’s’ primary concern as economists are quick to remind us of the higher intellectual plane that they occupy.

Asian equity markets managed to escape the carnage relatively unscathed perhaps this could have been chalked up to the fact that equity positioning is much lighter in Asia versus western markets.

Many are attributing last week’s move as a technical meltdown as opposed to a risk-off move so that the fundamental chart level will be worth monitoring again this week. But a case can also be made that the Asian governments reacted quicker with better track and trace technologies. Still, kudos have to be given Asia’s consumers who continue to adhere to social distancing rules

The wall of money argument will surely get tested out of the gates this week. US equity futures are struggling at the open, but not much changed economically. The concern seems to be the rising virus infection rate in parts of the US.

Economically, the virus has never mattered much – it is fear of the virus that matters where either policymakers’ shut down the economy like New York Governor Cuomo is threatening to do if there is a resurgence in Manhattan or consumers’ fears.

Forget strained China relations, forget struggling supply chains. What matters in the economic bounce back is that consumers overcome fear – of the virus and job security.

If consumers have trust in government policies, then they should be willing to spend. After all, government support during lockdowns has given many people income to spend if fear is not too significant.

International markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp