The World Health Organization(WHO) has stated that the coronavirus has officially become a global pandemic. It has greatly affected the stock market and disrupted the world economy. It has slowed down production, reduced demand, disturbed supply chain and posed serious threats to companies worldwide. International e-commerce activity has been severely affected by the flu-like virus. Worldwide stocks have been dwindling recently due to the effect of coronavirus on economic growth. The stats say that over 84,000 people have been down with the coronavirus and more than 3,000 people have died.
For the most part, financial stocks(banks and fintech) have been hit by the downturn. Interest rates are plummeting and banks are finding it hard to earn a profit on loans. Fintech and other businesses that depend on payment activity are encountering a deceleration in consumer spending. PayPal relies on payment volume to generate revenue and has been affected by the recent lower spending rate. PayPal, Microsoft, Apple, and MasterCard have come out to say that the coronavirus outbreak could negatively impact their revenue expectations for 2020.
Coronavirus has brought the financial markets under uncertainty, volatility, and pressure. Investors and traders are gradually pulling out of the stock market of nations worldwide because of it. The fear imposed by the coronavirus outbreak is causing the withdrawal of investors from equities. Companies are taking measures to calm investors from selling off. The coronavirus which was first found in China has also affected Amazon sellers whose businesses revolved around Chinese manufacturers for products. This is largely due to production facilities being closed down in China.
Airlines, travel companies, and cruise ship carriers have also been affected because cross-border travel is not encouraged during this time. Businesses that revolve around tourism and itineraries are not being left out too. Citizens of several countries are being put on lockdown until they find a way to tackle the coronavirus pandemic. The most affected countries have placed stern travel conditions on their population and have prohibited all public events. Brick-and-mortar shops and franchise outlets have been temporarily closed down in the most affected countries, especially China.
The negative effects of the coronavirus pandemic on the world economy are as bad as the virus itself. Companies now have no choice but to cut down capacity and render employees jobless. Flights to and fro Europe are being canceled. Firms that don’t depend on physical labor are encouraging their employees to work from home. Many meetings and conferences have been canceled while some are only going to be held online.
Major sports events are also being rescheduled until a later date as a result of the coronavirus. Three European Soccer Leagues such as the Premier League, Football League, and Women’s Super League have suspended all games. In the world of golf, the Masters golf tournament originally scheduled for April 9 has also been postponed. However, everyone is currently reducing their commuting activities and this goes to say that ride-share companies such as Uber are having their major blow too.
Everyone is asking whether the coronavirus will cause a global recession. The fear which the virus has brought to the minds of many cannot be underestimated. Many doubt the severe impact that the coronavirus has brought and will continue to bring upon the world for as long as it lasts. The global economy that is currently undergoing a huge downturn of events realizes how serious it can get. In the U.S., the New York Stock Exchange is planning to close the trading floor during this coronavirus pandemic.
Walt Disney has planned to temporarily shut down Disneyland World Resorts in both Paris and Florida very soon. Starbucks wants to close some stores in the U.S. just as they had done in China earlier this year. Papa John’s has already closed down 50 stores in mainland China due to the coronavirus outbreak. The fear of the coronavirus has allowed oil prices to plummet and energy stocks to fall. Major energy stocks have experienced a drop in prices. Cruise ship stocks, as well as airline stocks, are dropping too.
The crypto world is also having its share of price plunges too. Bitcoin, the mother of cryptocurrency has been dropping drastically. It has been very alarming news that the world’s biggest cryptocurrency by market cap has dropped. The coronavirus has caused panic selling on the part of crypto investors who are taken by fear. More investors have dumped Bitcoin in the last few days than has been done in the past decade. This mass selling of cryptocurrencies is mainly because of the uncertainty and volatility of the market right now.
The world has no idea if the coronavirus would end soon and this can continue to affect financial markets globally. Since the mother of crypto has experienced a huge hit, the altcoins are not being exempted. A wide range of cryptocurrencies has dropped in prices too. Over the past few days, Bitcoin has dropped so much and has exceeded the losses recorded by other asset classes like oil and stocks. The coronavirus is undoubtedly making investors run away from risky assets and that’s why Bitcoin is deeply hurt right now.
Recently, the Bank of England admitted that banknotes can carry viruses or bacteria and WHO has warned that people should wash their hands regularly especially if they come in contact with banknotes often. The coronavirus has also forced some world central banks to quarantine physical cash. The Bank of Korea executed a quarantine policy for physical money brought in by local banks. The U.S. Federal Reserve is now putting dollar banknotes that come from Asia separately for about a week before adding them to the economy.
The adverse consequences of the coronavirus outbreak on people’s lives are apparent and physical cash needs to be properly screened. However, WHO implores that everyone should switch to contactless payment technology. Online payment technology and digital assets ought to benefit from this contactless payment awareness. But, no one is absolutely certain about what might happen. The global economy is experiencing such huge turmoil that we barely know what to expect.