It has now been over 4 months since the news broke out regarding the new Coronavirus. At the time of its beginning, probably only a handful of people could’ve imagined how serious and severe the spread of the virus would be. As of this writing, there are over 550 thousand officially-confirmed cases around the world, with over 25 thousand deaths. The spread was so massive, that the United States even exceeded China in the number of confirmed cases, with some of the countries like Italy and Spain trailing close behind.
However, perhaps even scarier and terrifying than the possible physical harm that this virus can bring to us is the economic harm that can – and already has – result from it. The thing is, the virus itself, while it can be absolutely devastating for certain people, is nowhere nearly as dangerous as media portrays it to be. Some of the people even get Covid 19 and heal from it without even having any symptoms aside from mild coughing, sore throat and loss of smell and taste. It’s for people who are already predisposed to pneumonia-like conditions and other respiratory issues that the virus is dangerous for.
Despite this, panic and chaos have overtaken the world, and the media’s portrayal has a very large part in it. Sure, with how fast the virus is spreading, encouraging people to act carefully and stay safe is always welcome, but it does come at a price; a very dear price, actually.
As the fear over the virus has spread, it has had dire consequences on the world’s financial markets. The global economy is essentially put on halt, as the businesses and companies have seized operations due to the ongoing lockdowns. Millions of people over the world have lost their jobs, and millions more are expected to follow. Experts believe, that when all is said and done, the virus will have damaged the global economy by a few trillion dollars.
As the ongoing effects of the pandemic are being felt around the world, global markets have been seeing some drastic changes.
Forex Trading is slowing down
With such high volatility around the global markets, Forex trading has been rapidly slowed down, and needless to say, it’s fully understandable why. On one hand, you have the Australian dollar, which was at its lowest point in 17 years just 3 days ago, along with New Zealand dollars as well, which also fell significantly. On the other hand, you have the Japanese Yen, which has been steadily going up. All of these developments are very hard to predict, and sometimes even counter-intuitive, resulting in significantly less participation.
These developments have hit the Forex market really hard, as people are becoming increasingly apprehensive of the risks on the market. The beginner traders are heavily discouraged. Some of the platforms are now attempting to mitigate this by incentivizing the players with promotions like the Forex no deposit bonus 2020. The thing is, while the beauty of trading is that you can make the market conditions – good or bad – work in your favor and make a profit regardless, this is reserved for experienced players only. The beginners do not have the necessary technical expertise and know-how to be in this position and thus need extra encouragement.
Whether or not Forex recovers amidst this crisis still remains to be seen, as it hasn’t even been a month now since the outbreak of Covid-19 was declared as a pandemic.
Commodities Were Hit Hard
One of the readily-noticeable market effects of the virus is how the commodities were affected. At almost exact same time as the virus was declared a pandemic, oil prices fell drastically. This was also made worse by the oil price-war between Iran and Russia only days prior. These two factors, in combination, absolutely decimated the oil prices and resulted in an almost complete halt in oil trade around the world.
OPEC itself hasn’t made any notable measures to counteract this, so some experts believe, that it’ll take a few months for the oil market to recover.
Oil is definitely not the only sufferer here, as agriculture trade started seeing significant issues, only strengthened by the ongoing desert locust invasions that are going on in the world.
Metals are also under heavy pressure, as copper and iron were, and are, already declining in China.
With market turmoil of such scale, “shorters” have been having an absolute field day with this. As quite literally everything keeps going down, short-selling has become a new way of earning a quick buck.
According to some data from S3 Partners, a financial technology and analytics company, from Feb 19 to March 19, around $343 billion’s worth of profit was seen from the US shorts. This resulted in the market value of the shorted shares to drop from $958 billion to $656 billion.