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June 17, 2020

Why Global Stock Markets falling during COVID-19 pandemic?

What are the reasons behind the Stock Market Crash? Which Stocks have provided the Greatest Opportunities?

Why-Global-Stock-Markets-falling-during-COVID-19-pandemic Why-Global-Stock-Markets-falling-during-COVID-19-pandemic

Global Stock Market crash – What happened?

Global markets and stocks, especially the US ones, collapsed last Thursday, reporting its worst losses in one day since its March crash.

Investors wondered whether they rushed to boost the stock markets too fast and wide before being sure of the stability of the coronavirus situation.

So what did drive investors to make these massive sell-offs suddenly?!

  1. Fears and expectations over the second wave of COVID-19 infections have increased after the number of infected cases surged in some US states that reopened their economies.
  2. Concerns over another closing of major economies and enforcing lockdown measures again, which will add more pressure to the already injured economic activity if it stops again.
  3. The United States has solely over 2 million cases of the novel coronavirus, out of more than 8 million cases globally, and there are warning voices already talking about the second wave.
  4. Investors are concerned about the impact of this pandemic on the global economy after their realization that the United States will need much more time and effort than they expected to recover from the virus.
  5. The gloom outlook and caution tone that the Fed adopted at its last meeting and the negative forecasts for the US economy.

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Reasons behind the Stock Market Crash

The UK economy shrank by 20.3% in April compared to March, which is a record contraction that hasn’t happened before and shows the extent of the damage done to many parts of the economy.

The Organization for Economic Co-operation and Development (OECD) forecasts that the global economy will suffer from the worst recession in the last 100 years and global GDP will shrink by 7.6% in 2020.

In the best-case scenario, the global economy will contract by 6% in 2020, which is a catastrophe by all standards for countries, companies, and individuals directly.

The organization believes that the UK will be the worst affected country, while South Korea will be the least hit one.

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Which Stocks have provided the Greatest Opportunities?

After‌ ‌a‌ ‌hard‌ ‌and‌ ‌painful‌ ‌winter,‌ ‌a‌ ‌real‌ ‌spring‌ ‌has‌ ‌come,‌ ‌and‌ ‌not‌ ‌only‌ ‌on‌ ‌the‌ ‌street,‌ ‌but‌ ‌also‌ ‌on‌ ‌the‌ ‌stock‌ ‌markets.‌ ‌

As‌ ‌in‌ ‌nature,‌ ‌everything‌ ‌blooms‌ ‌and‌ ‌turns‌ ‌green‌ ‌with‌ ‌the‌ ‌arrival‌ ‌of‌ ‌heat.‌ ‌

This‌ ‌spring,‌ ‌as‌ ‌never‌ ‌before,‌ ‌we‌ ‌have‌ ‌lots‌ ‌of‌ ‌profitable‌ ‌assets‌ ‌that‌ ‌brought‌ ‌many‌ ‌traders‌ ‌a‌ ‌long-awaited‌ ‌profit.‌ ‌

It‌ ‌was‌ ‌really‌ ‌easy‌ ‌to‌ ‌open‌ ‌a‌ ‌successful‌ ‌deal‌ ‌in‌ ‌the‌ ‌spring,‌ ‌because‌ ‌it‌ ‌was‌ ‌not‌ ‌difficult‌ ‌to‌ ‌predict‌ ‌the‌ ‌rise‌ ‌after‌ ‌the‌ ‌fall.

‌‌Traditionally,‌ ‌we‌ ‌have‌ ‌chosen‌ ‌for‌ ‌our‌ ‌rating‌ ‌three‌ ‌assets‌ ‌that‌ ‌turned‌ ‌out‌ ‌to‌ ‌be‌ ‌the‌ ‌most‌ ‌profitable,‌ ‌and‌ ‌we‌ ‌have‌ ‌a‌ ‌new‌ ‌leader.

Our‌ ‌spring‌ ‌rating‌ ‌of‌ ‌the‌ ‌best‌ ‌deals‌ ‌has‌ ‌changed‌ ‌a‌ ‌lot‌ ‌compared‌ ‌to‌ ‌the‌ ‌winter‌ ‌one:‌ ‌WIZZ‌ ‌Air‌ ‌and‌ ‌Amazon‌ ‌have‌ ‌never‌ ‌been‌ ‌among‌ ‌the‌ ‌best‌ ‌assets‌ ‌to‌ ‌invest‌ ‌in,‌ ‌although‌ ‌Amazon‌ ‌has‌ ‌always‌ ‌been‌ ‌somewhere‌ ‌near‌ ‌the‌ ‌top‌ ‌three.‌

‌The‌ ‌global‌ ‌economic‌ ‌recovery‌ ‌is‌ ‌just‌ ‌beginning‌ ‌and‌ ‌will‌ ‌continue‌ ‌for‌ ‌a‌ ‌long‌ ‌time.‌

‌Therefore,‌ ‌the‌ ‌profitability‌ ‌of‌ ‌the‌ ‌leading‌ ‌companies‌ ‌will‌ ‌improve,‌ ‌and‌ ‌consequently‌ ‌share‌ ‌value‌ ‌will‌ ‌also‌ ‌grow.‌ ‌

Make‌ ‌the‌ ‌time‌ ‌to‌ ‌buy‌ ‌assets‌ ‌while‌ ‌their‌ ‌prices‌ ‌are‌ ‌still‌ ‌low,‌ ‌and‌ ‌your‌ ‌deal‌ ‌might‌ ‌be‌ ‌among‌ ‌the‌ ‌best‌ ‌ones‌ ‌in‌ ‌our‌ ‌next‌ ‌review.‌

1. WIZZ‌ ‌Air

wizz air stock market chart

Airlines‌ ‌were‌ ‌affected‌ ‌by‌ ‌the‌ ‌coronavirus‌ ‌pandemic‌ ‌the‌ ‌most,‌ ‌which‌ ‌was‌ ‌easy‌ ‌to‌ ‌foresee.‌ ‌

Losses‌ ‌for‌ ‌them‌ ‌amounted‌ ‌to‌ ‌billions‌ ‌of‌ ‌dollars,‌ ‌but‌ ‌this‌ ‌is‌ ‌absolutely‌ ‌not‌ ‌the‌ ‌case‌ ‌for‌ ‌traders‌ ‌who‌ ‌can‌ ‌earn‌ ‌both‌ ‌from‌ ‌the‌ ‌fall‌ ‌and‌ ‌the‌ ‌rise‌ ‌of‌ ‌stock‌ ‌prices.‌

‌As‌ ‌you‌ ‌know,‌ ‌in‌ ‌June‌ ‌we‌ ‌observe‌ ‌a‌ ‌widespread‌ ‌easing‌ ‌of‌ ‌the‌ ‌quarantine‌ ‌and‌ ‌restoration‌ ‌of‌ ‌air‌ ‌traffic.‌

‌The‌ ‌recovery‌ ‌process‌ ‌will‌ ‌be‌ ‌long‌ ‌and‌ ‌far‌ ‌from‌ ‌complete,‌ ‌but‌ ‌investors‌ ‌are‌ ‌already‌ ‌taking‌ ‌into‌ ‌account‌ ‌all‌ ‌perspectives.‌ ‌

So‌ ‌the‌ ‌shares‌ ‌are‌ ‌recovering‌ ‌in‌ ‌price.‌ ‌

Since‌ ‌mid-March,‌ ‌the‌ ‌airline’s‌ ‌shares‌ ‌have‌ ‌increased‌ ‌by‌ ‌36%,‌ ‌and‌ ‌the‌ ‌actual‌ ‌yield‌ ‌in‌ ‌trading‌ ‌amounted‌ ‌to‌ ‌2259.2%.‌

‌If‌ ‌you‌ ‌opened‌ ‌deals‌ ‌in‌ ‌mid-March,‌ ‌by‌ ‌the‌ ‌end‌ ‌of‌ ‌spring‌ ‌you‌ ‌would‌ ‌have‌ ‌received‌ ‌$123,290‌ ‌for‌ ‌1‌ ‌lot‌ ‌or‌ ‌$1,231.9‌ ‌of‌ ‌earnings‌ ‌per‌ ‌share.‌ ‌

At‌ ‌the‌ ‌same‌ ‌time,‌ ‌in‌ ‌order‌ ‌to‌ ‌open‌ ‌a‌ ‌better‌ ‌deal,‌ ‌it‌ ‌was‌ ‌necessary‌ ‌to‌ ‌invest‌ ‌only‌ ‌54.6‌ ‌dollars‌ ‌per‌ ‌stock.

2. Amazon‌ ‌‌(#AMZN)

Amazon‌ ‌‌(#AMZN) stock market chart

It‌ ‌was‌ ‌not‌ ‌difficult‌ ‌to‌ ‌guess‌ ‌that‌ ‌with‌ ‌the‌ ‌introduction‌ ‌of‌ ‌the‌ ‌quarantine,‌ ‌the‌ ‌closure‌ ‌of‌ ‌the‌ ‌trade‌ ‌malls‌ ‌and‌ ‌bazaars,‌ ‌online‌ ‌commerce‌ ‌will‌ ‌get‌ ‌new‌ ‌customers,‌ ‌and‌ ‌therefore‌ ‌-‌ ‌a‌ ‌new‌ ‌profit.‌ ‌

This‌ ‌was‌ ‌the‌ ‌case‌ ‌even‌ ‌before‌ ‌the‌ ‌beginning‌ ‌of‌ ‌the‌ ‌pandemic.‌

‌The‌ ‌development‌ ‌of‌ ‌e-commerce‌ ‌just‌ ‌greatly‌ ‌accelerated‌ ‌due‌ ‌to‌ ‌the‌ ‌lockdowns.‌ ‌

But‌ ‌Amazon‌ ‌is‌ ‌not‌ ‌just‌ ‌an‌ ‌online‌ ‌store,‌ ‌but‌ ‌many‌ ‌different‌ ‌projects‌ ‌that‌ ‌all‌ ‌turn‌ ‌out‌ ‌to‌ ‌be‌ ‌relatively‌ ‌successful.‌ ‌

Therefore,‌ ‌Amazon‌ ‌was‌ ‌the‌ ‌most‌ ‌stable‌ ‌and‌ ‌popular‌ ‌asset‌ ‌among‌ ‌our‌ ‌traders.‌ ‌The‌ ‌company’s‌ ‌shares‌ ‌have‌ ‌already‌ ‌increased‌ ‌by‌ ‌40.26%‌ ‌YoY.‌ ‌

The‌ ‌actual‌ ‌return‌ ‌for‌ ‌traders‌ ‌who‌ ‌opened‌ ‌a‌ ‌deal‌ ‌in‌ ‌mid-March‌ ‌was‌ ‌572%,‌ ‌and‌ ‌the‌ ‌profit‌ ‌amounted‌ ‌to‌ ‌$54,736‌ ‌for‌ ‌1‌ ‌lot,‌ ‌or‌ ‌$547.36‌ ‌for‌ ‌each‌ ‌purchased‌ ‌share.‌

‌At‌ ‌the‌ ‌same‌ ‌time,‌ ‌the‌ ‌investment‌ ‌amounted‌ ‌to‌ ‌95.5‌ ‌dollars.‌

3. Palladium

Palladium market price chart

Palladium‌ ‌is‌ ‌often‌ ‌among‌ ‌the‌ ‌best‌ ‌assets,‌ ‌and‌ ‌this‌ ‌spring‌ ‌was‌ ‌no‌ ‌exception.‌ ‌

The‌ ‌only‌ ‌thing‌ ‌that‌ ‌has‌ ‌changed‌ ‌is‌ ‌a‌ ‌trend‌ ‌according‌ ‌to‌ ‌which‌ ‌it‌ ‌was‌ ‌necessary‌ ‌to‌ ‌open‌ ‌the‌ ‌deals‌ ‌to‌ ‌SELL.‌ ‌

Palladium‌ ‌could‌ ‌not‌ ‌increase‌ ‌in‌ ‌price‌ ‌indefinitely,‌ ‌and‌ ‌this‌ ‌spring,‌ ‌with‌ ‌investors’‌ ‌appetite‌ ‌for‌ ‌risky‌ ‌assets,‌ ‌the‌ ‌metals‌ ‌came‌ ‌under‌ ‌pressure.‌

‌By‌ ‌selling‌ ‌palladium‌ ‌this‌ ‌spring,‌ ‌at‌ ‌the‌ ‌beginning‌ ‌of‌ ‌the‌ ‌summer,‌ ‌you‌ ‌could‌ ‌have‌ ‌made‌ ‌a‌ ‌profit‌ ‌of‌ ‌$59,487‌ ‌or‌ ‌$594.87‌ ‌per‌ ‌ounce.‌ ‌

The‌ ‌actual‌ ‌yield‌ ‌is‌ ‌314.24%‌ ‌in‌ ‌just‌ ‌two‌ ‌and‌ ‌a‌ ‌half‌ ‌months.‌ ‌At‌ ‌the‌ ‌same‌ ‌time,‌ ‌it‌ ‌was‌ ‌necessary‌ ‌to‌ ‌invest‌ ‌$189.2‌ ‌per‌ ‌ounce.‌ ‌

This‌ ‌is‌ ‌an‌ ‌impressive‌ ‌result‌ ‌that‌ ‌deserves‌ ‌third‌ ‌place‌ ‌in‌ ‌our‌ ‌rating.‌

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What to expect from the Global Stock markets?

usa america stock index market Will the downtrend persist

Futures for America are in a negative zone and the trend is down.

Asian indices are also down, but remains within the framework of an acceptable correction for the uptrend.

1. Downtrend

The market ended the last week, 12 June, just how it starts this week on 15 June—by slipping downward.

The main factor that came into play was the revision of expectations for the global economic recovery, which is based on forecasts by U.S. regulators.

The change comes as the markets may have overheated.

2. Escalation of old problems

The two problems that have concerned the markets are back in play, coronavirus and U.S.-China relations.

Prematurely removing quarantine measures may force some countries to reintroduce a strict quarantine, thus disabling business.

3. What about the markets?

Negative market attitudes are very much prevalent Monday morning.

In Asia, the leading indices demonstrate a decrease of 3.5%.

Chinese Shanghai Composite (–0.6%) appears better than others, despite weak data on industrial production from May (4.4% y/y, 5% y/y was expected).

Futures on major U.S. indices sharply rose Friday before falling 15 Monday, losing between 2.3-2.8%.

The nearest futures for Brent crude oil has lost more than 3.5%, retreating below 37.5 USD per barrel.

4. Weekly expectations

We are waiting for retail sales reports from May in China, the U.S., the U.K., and Canada.

Economists do not expect any major improvement.

For the United States, an increase in expenditures of 7.2% is forecasted.

However, if you exclude car and fuel sales, the expenditures drop to 3.9%.

For the U.K., an increase in expenditures is expected to be a modest 5%.

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