Coronavirus impact on the world economy and Financial markets

The ongoing spread of the coronavirus has become one of the biggest threats to the world economy and capital markets.

The coronavirus, which first emerged in the Chinese city of Wuhan last December, has infected more than 2,05,000 people in 170 countries and territories globally, according to the World Health Organization.

From an economic perspective, the major problem is not just the number of cases of coronavirus, but the level of disruption to economies from containment measures as most of the city lockdown in the Europe region.

The coronavirus pandemic becomes one of the biggest threats to the world economy and financial markets.

Meanwhile, fears of the virus outbreak on the global economy push back markets worldwide, with stock prices and bond yields plunging.

Below 5 field is impacted by coronavirus pandemic:

  • Downgrade in economic growth forecast

J.P. Morgan economists forecast the American economy to contract 14% in the next quarter, and the China economy to shrink more than 40% in the current quarter, one of the direst calls yet as to the scale of the fallout.

  • A slowdown in manufacturing activity

All around the world companies are going to shut down their all plants in China, America, Europe and South Korea. Fast spreading COVID-19 outside China, means that global manufacturing activity could remain subdued for a longer time.

  • A contraction in the service industry

The virus outbreak has also hit the worlds services industry as reduced consumer spending damage retail stores, restaurants, hotel and aviation industry. The Caixin/Markit Services PMI for China came in at just 26.5 in February, the first drop below the 50-point level since 2005.

  • Commodity prices plunge

Worldwide economic activity shrinks so oil demand also down, taking oil prices at multi-year lows to the 2002 year. The copper price is trading at the level, which markets not seen since 2016.

  • Crash in the stock market

World major market indices slump more than 30% in just last 30 days and S&P 500 limit down two times in the last three day.

From where and how to make money in this type of market:

Currently, there is huge volatility in the stock market, S&P VIX index who major market volatility at 80 levels, which market not seen since the 2008 financial crisis. American and European countries going into recession further so liquidity dries and stock not providing any value as per our analysis.

Gold always prove himself as safe heaven in this type of market. Investor and traders can easily invest and trade gold and hedge himself from other risky instruments.

As per market condition, it makes sense to trade in the currency market because it provides huge liquidity, less volatility compare to the stock market and 24-hour access so you can have many opportunities to make a profit.