COVID-19 In Financial Market: How Global Economy Infected By This Pandemic
COVID-19 in the financial market is a breathtaking word, especially for them who works in different sectors as well as investors. It is an unrivalled public health issue.
In the year 2019, it was first found in China and quickly spread all over the world. Almost 2.6 million people are infected globally, and almost 180,000 have died.
Right now, COVID-19 is a Global Pandemic, and the economy faces a major downturn because of it. According to research, it has some strong negative impact on the financial market that we have mentioned below.
- The future economic process will slow
- Impact on Geo-economics
- Banking and capital market
- Oil and gas
- Private and international investors etc.
Not only the developing countries but highly-developed countries such as the European Union, USA, China, Spain, Italy, etc. are also affected by COVID-19.
Let’s have a look at how the global economy is infected by this pandemic, and what are the ways to manage trading risk.
Globally Unemployment Issues During COVID-19:
According to Yahoo Finance, in the USA, on March 21, 3.3 million Americans have applied for unemployment benefits. However, the number has increased tremendously, and it was almost 5.245 million till April 18.
A recent report from the U.S. DEPARTMENT OF LABOR shows, the total unemployment record suddenly pushed by approximate 25 million. Moreover, other countries are also worst affected by this COVID-19.
Besides, approximately 70% of gig workers spending their life without any income, while they have all opportunities to earn money.
On the flip side, Canada Emergency Response Benefit (CERB) offers temporary income support if you have stopped working because of COVID-19.
In one press conference Gov. Roy Cooper stated that-
We know this virus is taking a toll on our economy.
According to him, small business owners will get funding as per their requirements.
At this point, he stated –
Small businesses are the lifeblood of our economy.
So, if you are a citizen of North California, you can also apply for the unemployment benefits from here.
COVID-19 In Financial Market:
Multiple trading sectors are affected by this pandemic situation. In the Forex market, the Australian dollar hit a 17-year low of $0.59215, and Kiwi hit an 11 year low at 0.5850 cents, while Yen gets stronger than other currencies.
The USA market is the world largest economic market. The stock market has reacted to a recent large drop. Fortunately, the price of stocks rose Wednesday Senate approves coronavirus relief funds.
According to the USA stock market update:
- The S&P 500 jumped more than 2%
- The Nasdaq jumped more than 2.8%
- Facebook (FB) rising more than 6.5%
On the other hand, due to the coronavirus effect, the Chinese stocks ended weaker on Thursday. However, financial analysts believe that the economy will recover very soon. Moreover, on Monday, the price of Crude oil has dropped to below $0 a barrel. It was a historic crash for crude oil.
Lastly, the crypto industry had the biggest fall in the last month. The world’s leading digital currency Bitcoin price was more than $10,000 on February 13, 2020. The price was dropped by more than 50% and recorded the lowest price of almost $4,000 this year.
However, it has almost completely recovered from the 50% drop in March. But, many bitcoin holders think that the price may not hit the moon soon, though there are only 20 days left for halving. At the time of writing, BTC is trading at $7,293.
Note that there are only 21 million Bitcoins available for mining.
How Trader Will Manage The Trading Risk:
The first and foremost thing for a trader is to make a proper trading plan before executing trades in this volatile market. Moreover, a trader must have to control trading psychology to avoid unwanted risk.
It is mandatory to create a plan with all useful information such as:
- Number of trades
- Trading assets
- Trade timeframe
- Expiration period
- Money Management
- Expected profit ratio
- Trading session
It is wise for traders if they execute orders by following Trend Trading. Trend Trading is a particular strategy for traders which is widely popular for both the professional and new traders.
As the news events have a strong impact on trading instruments, so it is recommended to check the latest news. According to the news, do not forget to track the open trading positions.
Whether you are professional investors/traders or a novice one, it is always suggested to pick the best asset that will give you the highest outcome. In this unwanted situation, your single mistake can bring destruction to your capital.
The risk management strategy can change your trading environment. So, follow the money-management rule and place an order according to that.
However, it is necessary to stay home and stay safe during this period.