European Stocks and the Pandemic
Coronavirus is still affecting stocks around the globe. European stocks being one of them. Economies record their worst times since the times of the Great Recession. Countries are spending a lot of money to help them combat the coronavirus as a vaccine is still on research.
Specifically, the stock markets in European nations and countries around the world are recording their worst performances ever. This is because of the current world crisis of coronavirus that is swallowing the world’s economies.
Earlier this week, the pan European Stoxx 600 index closed by a fall of 23.03%. However, this was not its worst ever on record since in 2002 it had a loss of 23.33%. IBEX 35 of Spain had its largest dive of all major indexes in the European region. It recorded a figure of 28.94%, this is worse than even the pan European Stoxx 600 index. The country records over 95000 cases of COVID 19 and over 8400 deaths.
With FTSE MIB in Italy, the country, with the worst record of COVID 19 cases, recorded a figure of 27.46%. On record, the country has over 105000 cases and over 12400 deaths because of coronavirus.
CAC 40 in France falls at 26.46%. The FTSE 100 in Britain at 24.8% and Dax of Germany records a plunge of over 20%. With the S&P 500 and the Dow Jones, records drop by 20% and 23.2%.
The Central Banks And The Government.
The governments and central banks of the European nations are trying to use policies to stabilize the situation in the markets. these policies are monetary and fiscal policies.
The central bank applies the monetary policies in countries. It involves managing the money supply in a country. The government also uses it in a country to achieve macroeconomic goals like consumption.
A fiscal policy helps the government to adjust its spending behaviors and rates of tax to control a country’s economy.
The European Central Bank set out 823 billion USD to help in fighting the economic strain. Governments of France, the United Kingdom, and Germany are opting for the monetary sister policy (fiscal policy).
On The Side Of Investors.
Investors around the globe invest in equity markets through shares, based on risks related. During this pandemic, a lot of investors are on the scale of 50-50 concerning investments in stocks.
Most of them are keeping an eye to see if the measures put across by governments will bring out the positive economic influence around the region. They are also looking out on any signs of the crisis having a slow pace. However, with the increasing rate of deaths around the globe, the situation appears more difficult than people think it is.
Despite the hard times, analysts say that the coronavirus pandemic could have also created great opportunities. They emphasize that only the courageous investors should use this time to increase their wealth.
Charalambos Pissouros, A market Analyst At The JFD Group.
The market analyst advises that countries should be out of lockdown if the fiscal and monetary policies are to resurrect the global economy.
“Thus, when this is reflected in economic data, investors may once again abandon risk-linked assets in favor of the safe-havens. To change our view, a vaccine has to be ready for distribution, and the vaccine, in this case, is neither fiscal spending nor monetary policy easing.”
Amit Lodha, Fidelity International Equities Portfolio Manager, Point of View.
Lodha says that investors with a 5-year and below prospect should put in mind cyclical dealings in expectation of change. Cyclical corporations involve those businesses that are in connection with the economy. They change depending on the current economic state.