10CFDs' analysis on the Coronavirus Economic Crisis

KUALA LUMPUR, Malaysia - March 31, 2020 - PRLog -- The coronavirus has the potential of taking some market sectors to the brink of a so-called 'crisis zone.' After major US indices have wiped-out returns of the last 6 months, going down by up to 14% in the week of 24th -28th of February 2020, it seems as if an avalanche is about to fall on Wall-Street. 10CFDs analysts note that according to the UN, the contraction in China's output due to the coronavirus has cost the global economy a whopping $50 billion since that China is a crucial provider of components for many industries, including automobiles, medical equipment, mobile phones, and whatnot.

10CFDs experts opine, "From the way it looks nowadays, tech companies, apparel makers and industrial-equipment manufacturers, are likely to be hurt the most, given that they are most reliant on inputs from China and Southeast Asia. The Aviation industry is one that might take the hardest hit of them all, as the coronavirus crisis marks yet another dangerous moment for airlines, which are already facing multibillion-dollar revenue losses as the disease hits demand."

How do traders need to respond?

According to 10CFDs experts, although the Fed took the highly unusual step of cutting the U.S. interest rate by 50 basis points to soothe markets, many economists still fear that the virus could send the global economy into a recession this year. With the virus now detected in at least 170 countries, companies are readjusting their annual profit expectations, economists are lowering their forecasts for global growth, and policymakers have signaled that if needed, they are ready to act to stabilize the economy.

10CFDs experts say, "Regarding the U.S.-China trade agreement, the coronavirus might delay a vital term of the phase-one China trade deal purchases, something that might cause exports to continue and fall sharply during the next couple of months of the year. Furthermore, every country has emergency protocols that are meant to deal with these types of situations of shortages, and we are currently waiting to see how they will impact the situation in the markets."

10CFDs analysts estimate that the start of 2020 will be a boring one. Right now, as we are 9 weeks in, the financial market hasn't yet been particularly volatile. As things have changed on February 20th, both the S&P 500 and the Dow Jones have dropped, which started one of the most volatile periods in the last decade. From March 8th to March 9th, world oil prices have dropped by more than 30%, while the cryptocurrency market lost nearly 21 billion. As uncertainty and fear are holding the restraints, there's absolutely no way to predict what the full economic impact of the coronavirus will be.