Is The Coronavirus Leading to a Market Breakdown?
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On Monday, March 16, 2020, the Industrial average of Dow Jones decline by over 2000 points, because of the novel COVID-19 pandemic, and the shifting oil prices. The Asian and European stock markets were also affected, as they saw the worse week for stocks ever since the global financial crisis 2007-08.
However, this is just the recent threatening economic update. The outbreak of coronavirus, is disturbing supply chains and logistics, impeding sales of many brands and products, hurting the travel industry, tumbling the stock markets, and increasing fears of a major economic recession.
However, there’s a lot that we still aren’t aware about the COVID-19, which makes any prediction about the economic depression extremely uncertain, for not only China, but the entire world. Also, it isn’t easy to isolate this one epidemic factor from others that are shaking and straining the markets and economies across the globe.
How Deep Lasting Would Be the Economic Downturn?
With the available mixed set of statistics, it’s difficult to foresee the widespread impacts of corona virus on the global markets. But looking at the fierce market reactions and actions from authorities—for instance, the slashing of interest rates by the Federal Reserve in the first week of March—it’s safe to say that the world needs to prepare itself for a potential COVID-19-linked breakdown.
Business giants like Nike, Apple and some other manufacturers have started feeling the negative impacts of the pandemic. In fact, Apple has revised and lowered its business projections for the first quarter of 2020.
Similarly, industries associated with traveling and tourism sector are also tumbled. Airlines, cruising, hotel industry; they all have felt the blow because of the travel regulations and bans and general fears about the outbreak.
Why Is the Stock Market Shaky?
As of March 21, over 275,000 corona virus cases have been reported worldwide, with more approximately 11,554 deaths. The epidemic has now reached other countries of Asia, United States, South America, and Europe.
The apprehension that COVID-19 will keep on spreading and consume the global economy appears to be a major cause of the economic tension.
Will COVID-19 Lead to a Global Recession?
Everyone is curious to know whether or not COVID-19 will result in a worldwide economic recession. The simple answer is that it certainly could. However, again, the severity and deepness of the breakdown depends on how early the virus is contained and resolved.
If we take a look at the history, we can see that the global markets have stayed comparatively immune to the negative effects of past pandemics, including SARS (2003), Avian Flu (2006), Swine Flu (2009).
A short-term decline in stock markets would be followed by a usual upward trend. However, we cannot completely rely on the past performance to predict future results. There are possibilities that this pandemic may have bigger and worse consequences.
What This Means for the Investors?
While investing in stock market shares isn’t a safe option for investors amidst the COVID-19 chaos; they can diversify and strengthen their portfolios by investing in gold and silver coins.