Are equity markets expecting the coming shift in the sectoral structure of the economy?

The sectoral structure of the econom y can be expected to shift significantly after the coronavirus crisis, given the fall in demand for durable goods and tourism, the growth in online retail and home working, and increased concern for the climate and the environment. This allows us to identify: Sectors of the economy that may face a long period of difficulty: capital goods and transport equipment, commercial real estate, fossil fuels, tourism, traditional retail, air transport, financial services (due to the difficulties of the aforementioned sectors); Sectors that should be in good health: fast-moving consumer goods, agri-food, personal services, technological goods and services, pharmaceuticals, renewable energies. We seek to determine whether equity markets (in the United States and the euro zone) have responded commensurately with this outlook for the various sectors of the economy. We find that the sector-by-sector reaction of equity markets aligns almost perfectly with the situation of the various sectors of the economy that we expect.