We would like to believe that by now, your government must have given you multiple warnings to stay within the confines of your home until the war is over. The war, not between nations but with a virus that has outdone any crisis that mankind has witnessed in the longest fathomable history- the pandemic COVID 19.
While we hope that you are adhering to all the measures requested by the World Health Organization and your governments to stay safe, we are dedicated to providing you with insights from the investing and business world. So read on, and if you like what you read, do share the article with your acquaintances using the share options above. ?
It is disheartening that the novel coronavirus has claimed lives, made people ill (very ill!) and slumped businesses & economies alike. However, there is some good news- homo sapiens are finally back in the game- with better equipped medical facilities, ever-alert independent organisations, positively reactive governments and central banks and bolstering stock exchanges.
We will discuss all of this below, but before that- how about a pandemic reality check?
Please note- Data as on 26 March 2020, sourced from WHO & OECD-
How Are Stock Markets Across the World Reacting?
As WHO Director-General Dr Tedros Adhanom Ghebreyesus recently stated, COVID 19 continues to take a massive toll not just on health, but on so many parts of life, and for instance, the stock markets have hit hard and witnessed massive sell offs a couple of weeks back. This was the phase when the world was puzzled with the repercussions of the novel coronavirus on businesses.
Noticeably, investors have been nervous to secure a solid nest egg for themselves in the times of crisis.
But as we all know “change has always been believed to be the only constant”. Stock markets have been making impressive comebacks off late, primarily at the back of fiscal policies being infused in economies all over the world by governments as a must-required aid to overcome COVID 19.
The dollar and global equity markets have been marching higher, indicating an awaited market recovery post the coronavirus-induced selloff.
Let the below do the talking-
- On 24 March 2020, the Dow Jones Industrial Average soared over 11 per cent, marking its biggest single-day percentage gain in decades
- On the same day, the benchmark S&P 500 jumped over 9 per cent
- The next day, on 25 March 2020, the benchmark S&P 500 closed over 1 per cent higher
- The Dow Jones Industrial Average was up by 2.39 per cent on 25 March 2020, further advancing by 6.38% on 26 March 2020, demonstrating back-to-back gains
- More recently, on 26 March 2020, Australia’s S&P/ASX200 index finished the day’s trade at 5113.3, up by 2.3 per cent (115.2 basis points). It should be noted that the day marked the Aussie stocks rally well for a third straight day
After seeing these green stock market figures for three consecutive days, you would be wondering- what’s propelling the stock market global rally? While there could be multiple reasons (medical advancements for COVID 19, more recoveries, better vigilance and preparedness), one reason is the hottest catalyst- Stimulus Packages. Read on-
Stimulus Packages Across the World
Governments are being forced to inculcate what we call war time measures- country lockdowns, social distancing and quarantine procedures, all taken at significant social and economic cost.
Decisions are constantly being made for various global activities to be postponed or cancelled. For instance, the Government of Japan and the International Olympic Committee was recently left with no option but to postpone the 2020 Olympic and Paralympic Games.
However, Governments are doing their best to help nations with stimulus packages to curb and eventually eradicate the COVID 19 current and aftermaths.
Again, we will let the below do the talking-
- The United States of America received a USD 2 trillion economic rescue package
- Australian PM Scott Morrison announced a $ 66 billion package
- Indian PM Narendra Modi declared a ~ USD 2.1 billion financial package
With these packages being injected in economies, investors are bound to regain their confidence in the business and investing world. They are also likely to invest money into lucrative stocks, depending upon their respective risk appetites, while assessing the sinusoidal trend and volatility that the market has been subjected to recently (on and off).
Some current update! Now that we are discussing sinusoidal trend, the market has yet again showed that it can be extremely dynamic, even in a matter of few hours. We say this because as at 1.16 PM AEDT on 27 March 2020, the S&P/ASX 200 was trading down by 2.3 per cent to 4995.7.
Amid the crisis, it revives optimism that stock markets, the dynamic expanse that they are, are back in the game and could possibly continue to do so, if economies introduce apt micro and macro level tools at the right time. As for investors, long-term investing and not losing hope in turbulent times should ideally be the key.
It is a worrisome fact that the world has lost thousands of lives and could lose more if we don’t take what the WHO deems to be “more precise and targeted measures”. While we are in the lockdown and tackling the virus, we should remember that quoting from Dr Tedros-
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