The coronavirus pandemic has impacted every part of the business world over the last year. From the way people go to work to the effect on household finances, nothing is immune. And when it comes to finance and the stock markets, there’s been an evident change there too. It would be simplistic to say that the stock market has been entirely wiped clean by the pandemic and ensuing crash, but a trend towards uncertainty can be identified. Here’s more information about the impact that the pandemic has had on the stock market.
An initial drop
The first drop in stock market value was by far the most unpredictable given the suddenness with which it arrived in Australia and further afield. In the initial hours after realisation of the pandemic’s impact hit Australia, the Australian Securities Exchange saw a dip in value. Some savvy traders may have closed positions in the days leading up to this, but by the time the full potential impact of lockdowns and so on was known, values were already down.
Winners and losers
As The Bull stock news shows, the impact was neither uniform nor long-lasting. Pre-pandemic, it was impossible to predict that specific sectors – such as some pharmaceutical firms – would see a rise in value. But the pandemic was full of winners and losers. In the US, for example, shares in Pfizer went up by 3% or in the wake of just one release of tentatively upbeat results. That sort of increase cannot be predicted with any degree of accuracy.
Overall, meanwhile, stocks in Australia – at least – managed to go up in the face of the coronavirus within just days of the initial announcement. With central banks bringing down interest rates as a way of stimulating the economy, the stock market’s overall value went up soon after mid-March as investors scrambled to get their hands on central bank-fuelled value.
What’s coming next?
The central pattern of the pandemic has been and continues to be, one of unpredictability. The arrival of a second or even a third wave may have been predicted, but the precise timing and magnitude of the economic impact are much harder to determine. Even as 2021 dawns, it remains unclear exactly when the world will be fully or mostly vaccinated – and whether other draconian lockdowns, with all their consequent effects on stock market value, will occur.
With 2020 now drawing to a close, it remains unclear how the coming year is likely to pan out both for traders and for the broader economy. Just like everyone else, stock market traders have no crystal ball. It remains the case that traders ought to proceed with caution and rely on tried and tested research and risk mitigation methods to protect themselves and their portfolios as much as possible.