Hi guys, as everybody knows the best time to invest is when the market is down. So, we brought this post for you guys who want to know how badly the stock market was affect by this pandemic and what do some of the officials think about its comeback.
So, as corona virus put Europe and the United States in virtual lockdown, financial economists, credit rating and country risk experts have scrambled to rearrange their assessments considering the economic challenges posed by the crisis. M. Nicolas Firzli, an advisory board member at the World Bank Global Infrastructure Facility, refers to it as "the greater financial crisis and says it is bringing to the surface many pent-up financial and geopolitical dysfunction.
Stock markets have declined over 30%; implied volatilities of equities and oil have spiked to crisis levels; and credit spreads on non-investment grade debt have widened sharply as investors reduce risks.
Source: OECD
The major markets of the world (US and UK) have gone under great depletion due to the pandemic. On 24 February 2020 DOW jones industrial average and FTSE 100 dropped more than 3% as the coronavirus outbreak spread worsened substantially outside China. This follows indices falling sharply in continental Europe after steep declines across Asia. The DAX, CAC 40 and IBEX 35 each fell by about 4% and the FTSE MIB fell over 5%. There was a large fall in the price of oil and a large increase in the price of gold, to a 7-year high. Stock markets worldwide reported their largest single-week declines since the 2008 financial crisis. The reduction in the demand for travel and the lack of factory activity due to the outbreak significantly impacted demand for oil, causing its price to fall.
Will the markets recover to pre-Covid state?
In November the world saw a boom in the stock markets as many companies announced the release of the COVID-19 vaccines. According to OECD the global economy may get back to pre-pandemic state by the end of next year as vaccines help propel recovery. There are signs from many big companies like Moderna, Pfizer, Astrazenca that the vaccine could be just weeks away from people.
OCED chief economist Laurence Boone said there is a chance for the first time that there is a hope in future for the markets to recover back. “progress with the vaccines and treatment have lifted expectations and uncertainty has receded” she said. This is a good chance that the levels of markets may recover and many countries also can recover from bankruptcy. Though UK as went under a second lockdown because of the spike in their COVID-19 numbers, we need to digest the fact that the future is unpredictable.
As the unemployment rate has increased all over the world, people are waiting for the vaccines to be available.
Source: US bureau of labour statistics
Conclusion:
The eurozone will make up even less lost ground. After a 7.5% contraction in 2020, it is expected to grow just 3.6 % in 2021.
Japan is expected to fare similarly, with a 5.3% contraction in 2020 followed by a 2.3% rise in 2021.
Even other major emerging nations are also expected to only slowly recover.
India on other hand is doing better, with its 9.9% drop this year followed by a 7.9% rebound.
Overall, China is expected to account for one-third of global growth next year, while Europe and North America are expected to contribute less than their weight in the global economy.
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