Since the emergence of coronavirus, economies have been striving to come up from their crippled states. The stringent Draconian measures that countries adopted amid the pandemic have significantly contributed to the current economic crises. COVID-19 surge kills hope as global stocks topple.
Global Stocks Plunge
As of Monday, Global stock markets have been toppling. This is attributable to the rising cases of coronavirus, which discourages investors from laying off their money for investments. As such, hopes of economies recovering are slowly wavering. Meanwhile, some data has shown the Chinese economy picking up faster than expected, especially after the virus strongly hit the country.
European Stock Declines
The European stock measured by the STOXX 600 index recently declined from its last performance of a 0.1% increase at around 1446GMT, after unsuccessful merger talks between French retailer Carrefour and Alimentation Couche-Tard. Similarly, Europes 50 most significant stocks also plunged by 0.2%.
China Economy Improves amid COVID-19
Meanwhile, stocks in Asia happen to be increasing as businesses in China resume to normalcy. Last year, Chinese blue-chip stocks rose by 1.1% after their economy grew to 6.5%. The latter percentage surpassed the initial 6.1% growth that economists had early predicted. Industries also produced goods much more than what economists had estimated. However, retail sales did not go well.
According to Lauri Hallika, an FX strategist, domestic demands, i.e., the money spent on goods and services, is recovered slowly as it still does not have a solid backing. Moreover, constant cases of the COVID-19 virus have also intensified fear among investors this year. Recent Coronavirus updates reveal that China has confirmed over 100 new Coronavirus cases in the northeastern part. As such, the infections have started raising concerns amongst millions of people traveling for the Lunar New Year Holiday.
Currently, the city of Gongzhuling in Jilin province has reinforced new restricting measures. The town of about one million people has over 29 million people under lockdown amid the contagious virus. Hallika remarked that the lockdowns and mass testing wouldn’t have much impact like the previous one.
In contrast to China, the economy of the United States and Europe continue to plunge. This is because of the unending coronavirus cases which have hit consumer spending in the countries. Reports reveal that retail businesses in the United States are slowly resuming. And that continues to impact tremendously on the country’s economy.
Bubble
A bubble is an economic cycle characterized by the rapid escalation of market value, particularly in the price of assets. Typically, a bubble is created by a surge in asset prices that is driven by market behaviors. During a bubble, assets usually trade at a cost or within a price range that significantly exceeds the asset’s intrinsic value.
Bitcoin cryptocurrency achieved a tremendous rise the previous year despite the alarming challenges. It had escalated from US$4748 in March last year when coronavirus had taken a toll on the economy to US$ 30,000 by the end of 2020. Since then, it has continued to rise, up to US$38000, making headlines daily. This rise is because of the influx of investors from large scale institutions.
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