A fiery start to 2020
The year 2020 has been one shrouded in controversy, doubt and uncertainty and we are only in the first half of the year. We have witnessed enough news to last 10 years over despite only being in June.
The year started with bush fires ravaging Australia, devastating landscapes and destroying homes and communities of thousands of people. Shortly after, tensions were reignited between East and West when a Ukrainian jet was shot down over Iran. If this wasn’t enough, a virus broke out in China and quickly emerged as a deadly threat on a global scale, subsequently killing hundreds of thousands of people and forcing governments into measures never seen before.
2020 has been bumpy so far, yet it has provided a perfect marketplace for CFD traders opening buy positions in March and seeing markets recover in May and June.
March 9th, now coined Black Monday, saw global markets have billions of dollars in valuation wipes as panicked investors looked to sell off stocks for liquid cash. The crash created a feeding frenzy for CFD traders with shorting opportunities a plenty as well as chances to long stocks when prices looked to have bottomed.
Technology proves to be strong
Although Stocks plunged at Q1 end there were market bright spots, particularly in the technology sector, as products such as Zoom turned from conferencing app to the unofficial app of quarantine as family, friends and colleagues kept in touch remotely.
Netflix and Amazon were not immune to the mid-March crash but bounced back strongly as lockdown measures were announced. NTFLX hit lows of £290, climbing consistently and pricing today at £426 – a 37.98% growth from March to June. Amazon showed a similar trend hitting lows of £1,655, coming in today at £2,583 – a 43.79% climb.
Stimulus packages from governments and higher employment rates have revived forecasts for a ‘V-shaped recovery’, pushing the tech-heavy Nasdaq to 10,000 points for a new all-time intraday high on 9th June.
Oil price plunge and downed flights
March saw an oil price war explode between OPEC and Russia as a pact that had been in place for 3 years was on the brink of collapse. In a matter of days, oil prices fell by 50%.
Demand for oil dried up as lockdown measures were implemented in most countries globally, reducing air travel by 95%. For the first time in history, oil prices ran into negative. Oil producers took unprecedented action by paying buyers to take the commodity off their hands as storage was running so low there were fears of storage facilities reaching capacity.
IAG (International Airlines Group) reported post-tax losses of £1.5bn during the first quarter alone. British Airways share price fell from a stable £350 mark and tumbled to lows of just £88 in the fateful March week. Shrewd traders going long at the market bottom and trading with leverage will have seen a healthy ROI as BA is now floating around the £189 mark.
Regular flights will shortly resume and there is news of BA suing the UK Government over lockdown rules which could spell good news for BA investors and shareholders.
Eagerly anticipated BTC halving
Just 4 weeks ago, we witnessed the 3rd BTC halving, cutting the reward to 6.25 BTC. The event was not as profound as first projected, as Coronavirus impact scuppered usual volatility trends.
January opened with BTC at $7,187 pushing to a $10k breach as pre-halving started heating up nicely. Although technology has been a bright spot, BTC was not immune to COVID-19 and stooped to a 2020 low of $3,995 – a 65% decrease in just 36 hours.
BTC price rallied in April and continued into May. A sharp bull run on 1st June breached $10k for the second time this year which was short-lived as BTC corrected back to the $9.5k mark where it has floated around ever since.
What to expect for the rest of 2020?
As lockdown rules are being lifted and normal life is slowly returning, we should start to see noticeable signs of economic recovery as people return to work and global travel resumes. The tourism industry has been heavily affected but these developments will be welcome news for hospitality staff.
The technology sector has won the first half of the year, but what does the remainder of 2020 hold for big businesses hit hardest financially from the fallout of recent events?
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