General Analytics

COVID-19 Impact on Financial Markets

We know that the pandemic’s initial peak occurred in Wuhan, China, in December 2019. Markets of other significant nations (including India) distanced themselves from the problem while China struggled to solve this pandemic, believing that this problem would only affect China. Because of this, there were no severe changes in the markets of other countries at first.

Most markets, including the US and India, started out being relatively resilient. In fact, several organisations even believed that since trade and manufacturing industries may have been moved out of China, US and Indian businesses may benefit from it. But none had foreseen that in a few weeks, these governments would also impose a complete lockdown to slow the virus’s explosive spread throughout their countries.

The US president has taken action to stop the spread of COVID-19 after hundreds of cases were recorded daily, while the Indian Prime Minister announced a 21-day nationwide lockdown on March 24. This blog will primarily focus on the financial costs of this small illness worldwide. To further examine particular regions, let’s define them. This is mostly broken down into stock market and crude oil price analyses.

Impact on Stock Market

1.    Stock Market

What exactly is a stock market? maybe the stock market? A stock market is just a collection of people who buy and sell stocks (or shares). Shares represent the ownership claim on firms. Typically, there are two different kinds of stock exchanges. The first is the public stock market, which comprises the BSE, NSE, and NASDAQ. In contrast, the private stock exchange is the second, which only facilitates direct transactions between investors and private corporations.

2.    Bombay Stock Exchange

It is both India’s first and biggest security exchange. Along with the NYSE (New York Stock Exchange), NASDAQ, London Stock Exchange, Japan Exchange Group, and Shanghai Stock Exchange, the BSE is one of the largest exchanges in the world, with more than 6000 businesses. The SENSEX index, which includes 30 of the top stocks on the BSE and covers 12 distinct sectors, is used to gauge the overall performance of the BSE.

Impact on Sensex

It was accurately predicted that the Coronavirus pandemic would also influence the Indian financial sector just a few weeks after it had already affected one-third of the worldwide market. In January 2020, the Indian SENSEX market reached an all-time high of 42273.87; then, between February and March of that same year, it dropped by almost 30%.

Global Market Impact

Global stock markets have experienced significant changes; due to the coronavirus outbreak, the FTSE, Dow Jones industrial average, and Nikkei have all experienced significant declines. The one-day decline in the Dow and FTSE was the largest since 1987. Many nations, notably the US, UK, and India, have lowered their interest rates in response to this downturn. This, in turn, will make borrowing easier and, ostensibly, allow banks to enable loans with low-interest rates that will increase spending and accelerate economic growth.

Impact on Crude Oil

Since the start of this year, crude oil prices have decreased precipitously, principally for two reasons. One is the coronavirus pandemic, which devalues billions of significant oil and gas companies’ stock prices globally. Conflicts between Russia and the Organization of Petroleum Exporting Countries (OPEC) are yet another. The world’s greatest energy user first experienced a significant economic downturn due to the discovery of COVID-19 in China. As a result of the oversupply of oil and gas products caused by the drop in demand, prices fell.

Two of the biggest oil producers in the world, Riyadh (the capital of Saudi Arabia) and Moscow (the capital of Russia), announced separately that they would flood the market with oil in April. This would allow the decline to continue when the global Coronavirus epidemic causes a further decline in demand.

Final Thoughts

The ECONOMIC crisis is the main danger that is approaching before this epidemic. Due to the spread of this sickness, major developing nations have made efforts to lock down their entire country, resulting in a sharp rise in the unemployment rate. Daily bettors won’t have enough money to feed their families, and small and medium-sized businesses that depend on their daily manufacturing output would run out of cash, increasing unemployment and poverty. The question of when the world economy will revive lacks a clear answer. One thing is certain, though: this pandemic has led the globe to realise that nations need to devote more time and money to their public healthcare systems rather than the military.

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