The performance of world markets in the pandemic

Market chart

Equity-market performance around the world has diverged in response to government stimulus measures and those exposed to the digital revolution.

At the end of July, the S&P 500 index of larger US company shares pushed ahead of its starting level this year. Nasdaq powered on, forming more new highs. It has now delivered a 22% increase for the year to date.

Both these indices have drawn their strength from the extraordinary fiscal and monetary stimulus provided by the Federal Reserve and US Congress and thrived on the results of the mighty US digital corporations. The dominant US technology giants have grown their businesses dramatically as a result of the lockdowns and social distancing policies followed in much of the world. These have persuaded or forced people to buy online, talk to friends and family online, and download their entertainment online.

The monetary stimulus was crucial, as even the big tech companies saw their share prices fall away sharply in the early days of the Covid-19 crisis. Market fears then of mass unemployment and mass bankruptcies hit even the winners from the antivirus policies. Nasdaq is now 62% up from its March low, leading global markets higher. Today, US markets enjoy the continuing money expansion and look forward to new fiscal stimulus as both main political parties consider how to boost the chances of their presidential candidate.

View Full Article – published by Charles Stanley on 7th August 2020