The COVID-19 crisis is like a grave, and it surely holds the potential of taking some major market sectors to the so called ‘crisis zone.’ TradingTeck’s analysts note that according to the UN, the contraction in China’s output has cost the global economy an outstanding $50 billion as a result of the pandemic. Although this is only an estimate, it could be possible because China is the sole provider of components for many industries such as automobiles, medical equipment, mobile phones, and others.
TradingTeck experts are saying that, “Tech companies, apparel makers and industrial-equipment manufacturers, are more than likely going to feel the impact of the outbreak the most because they are mostly reliant on inputs from China and Southeast Asia. Another sector that might take the hardest hit has to be the Aviation industry, only because the COVID-19 crisis makes it a very dangerous moment for airline companies. In fact, according to many market analysts, it is a sector that is already facing multibillion-dollar revenue losses immediately, as the virus hits demand.”
How do traders need to respond?
TradingTeck experts say, “Though the Federal Reserve has taken an unusually bold step of cutting the U.S. interest rate by 50 basis points to soothe markets, many industry experts still fear that the COVID-19 virus could send the global economy into a recession this year coupled with the fact that the outbreak is now recorded in more than 200 countries and territories. And while Most companies are readjusting their annual profit expectations, economists are lowering their forecasts for global growth, and policymakers have signaled that if needed, they are ready to do everything it takes to stabilize the economy.”
The COVID-19 virus might delay a vital term of the phase-one China trade deal purchases of the U.S.-China trade agreement. This might cause exports to continue to decline sharply during the next couple of months of the year. Also, emergency protocols of every country are meant to deal with these types of situations of shortages to reduce the impact of the COVID-19 pandemic on the markets.
TradingTecks’ analysts said that the first quarter of 2020 was a boring one. And now, as we are in the second quarter of the year, the financial market has suffered from the COVID-19 outbreak. As things have changed on February 20th, both the S&P 500 and the Dow Jones have dramatically dropped, which started one of the most volatile periods in the last decade.
“World oil prices dropped by more than 30% from March 8th to March 9th, while the cryptocurrency market lost nearly 21 billion. As uncertainty and fear continue to hold their sway, there’s absolutely no way to predict what the full economic impact of the coronavirus will be.” Concluded, TradingTeck analysts.