Global Stock Market Update October 2020

Earlier this year a historical slump in stock markets heralded a new era, which marked the beginning of constant turmoil in all markets and industries. This is why a sudden surge in third-quarter GDP on Thursday last week came as a relief to investors. But how will the stock markets evolve from this point? Will we witness an economic recovery with all the instabilities taking place globally at the moment? Traders globally are adopting a risk-off mood as a response to the current, volatile state of the global economy. European countries are bolstering restrictions to avoid a rise in coronavirus cases. This shall indeed drive the volatility index higher, and it has been predicted that we might face an investing catastrophe this year. France and Germany as major economies of the European Union have both announced tougher restrictions, which most likely will halt the economic recovery of these countries. Italy has again hit a record in the number of new coronavirus cases, and the government has put into force nightly curfews that will affect the income of all industries and local businesses. All of this is taking place as a scientific finding shows a variant of coronavirus originating from Spain is spreading fast across Europe. The tourists who spent their time in Spain during the summer are, allegedly, the main reason for this fast outbreak.

The United Kingdom is reportedly the worst-hit country by this coronavirus variant currently. By the end of Wednesday last week, shares of 98 out of the UK’s top 100 blue-chip companies fell lower in a sell-off, and they are expected to go even lower in prices. Europe’s northern hemisphere is anticipated to be hit by a significant second wave of coronavirus which shall complicate the region’s economic/market recovery any time soon. Multiple economy sectors have been already experiencing a significant fall all across Europe. This amount was reportedly 10% during the pandemic. With the UK probably following the trend of going under a lockdown in Europe after Germany, France, Switzerland, the global indices are experiencing an unprecedented fall. Making any predictions regarding how the market will evolve in this tough period would be hasty and uncertain, at least until the virus can be contained. Stocks in Asia also experienced a slump, with major losses for the main indexes in Japan, Australia, and Hong Kong. Banks, energy stocks, and miners are worst hit by the turbulence of stock markets in Australia, while tech stocks globally are enjoying a stable state, with gains in prices every once in a while.     

As the dollar strengthened against the euro and sterling, along with the Japanese yen 0.3% fall, prices of gold and crude oil both went down, as low as 1.4% and 4% respectively. Usually, under uncertain conditions, gold attracts investors and goes up in price. But it has proved not to be a safe bet so far, experiencing ups and downs in the turmoil. The number of floats for the rest of 2020 is expected to be much lower than previous years with so many initial public offerings delayed amidst the pandemic. This is a natural result of weak consumer spending and interest rates at all-time lows. As much as businesses will avoid going public if market conditions remain unfavorable, businesses linked to coronavirus will megatrend and make most of the current situation. These are industries such as e-commerce, industries helping with producing respirators, health, and beauty, meal delivery, alcohol, or home improvement. These markets seem to safeguard the profit of investors most in the current situation as selling shares has skyrocketed.  

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