A year ago this week, the Covid-19 outbreak was declared a pandemic by the World Health Organisation. The subsequent impact on the global financial markets sent shockwaves throughout the world, as the coronavirus pandemic brought with it unprecedented shifts to how we work, interact and live. The foreseen impacts of changes to everyday life, as well as the inevitably negative effect on mortality, global economies, trade and workforce shed a dark light on what lay ahead for the markets.
What have we learned a year on since the March 2020 market crash?
The outlook for financial markets was all doom and gloom this time last year. While the coronavirus has indeed wrought havoc on many companies and nations, the stock market has recovered significantly since the market crash brought on by global lockdowns. Below are a few examples of how the stock market has changed a year since the pandemic was declared.
Stocks Leading the Way
As the world adapted to the new normal, so did investors. Companies that cater to home-based activities, such as Netflix, Zoom and Peloton skyrocketed, while delivery services such as Amazon also received a surge of investment attention.
As some economies began to take their first steps towards the long road to recovery, investment shifted towards stocks that supported this attitude. Stocks such as energy and industrials reinstated themselves as market leaders – the price of gold even reached a new all-time high – demoting tech stocks to a close second.
The Role of Retail Investors
Retails Investors, a.k.a. individual investors, played a significant role in the stock market’s recovery. Through trading stocks on exchanges, or buying and selling securities, these non-professional traders were able to earn profits from thriving assets while also indicating which stocks were deemed useful for individuals. For the first time, retail investors became an important part of financial markets.
A Changing Demographic
The rise of online trading platforms means that younger and less experienced traders could gain access to the financial markets through a medium they’re familiar with – the mobile app. This shift has opened the markets up to a whole new demographic of traders, boosting trading volumes to new heights. The power struggle between Wall Street and retail investors still has many issues that haven’t been resolved, as evidenced through the GameStop saga, but younger traders appear to be one of the driving forces behind increasingly volatile stock prices.
Furthermore, new investors have embraced the crypto bull run, supporting Bitcoin’s recent astonishing rise to over $60k. Stocks such as Tesla and Etsy have also been popular choice among retail investors, pushing prices higher and higher.
The stock market has come a long way since the record lows experienced during the March 2020 market crash. Economists are now predicting further growth for global economies, indicating positive changes in the markets for the year ahead.
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