It’s no surprise that market volatility has increased quite considerably since the Covid-19 pandemic first reached international shores. In February 2020, the coronavirus crisis caused the S&P 500 to decline by nearly 35%. Historical S&P data suggests it will take between 645 and 741 days for the market to recover from the 33.9% loss caused by the most recent crash.1
But how does this crisis compare to previous market crashes, such as the Great Depression, Black Monday, the Great Recession and the dot-com crash? And what could happen if the Covid-19 pandemic worsens – or improves?
To bring this narrative to life, IG has produced ‘Coronavirus: what is the impact on the stock market?’. This visual guide provides insights into the impact of the crisis on the S&P 500, the potential market recovery rate, the relationship to global unemployment rates, and more.
You can view it here:
Making a prediction about the S&P 500’s rate of recovery following the coronavirus crisis can be challenging, as there are many variables to consider. However, IG has looked at historical events to identify when the index is likely to rebound. The company’s research shows that:
The research also delves into the unemployment crises that have resulted from the Covid-19 outbreak, with millions of people losing their jobs in the retail, travel and restaurant industries. Recent data shows that:
The guide also lists the assets most affected by the outbreak. These include:
Lastly, the article explores why the coronavirus crash is different to previous market crashes – it wasn’t caused directly by the bursting of a bubble or a debt crisis.
You can read more about these findings here:
Irene Castaneda, off-page team leader.
The company is a member of the FTSE 250, and has offices across Europe, North America, Africa, Asia-Pacific and the Middle East. It also offers on-exchange limited risk derivatives via the Nadex brand in the US.
1 Based on the average rate of market recovery of previous technical recessions.
2 As at 23 March 2020, using S&P 500 market close data, excluding intraday highs and lows.
3 Macrotrends, 2020
4 Financial Times, 2020
5 Euronews, 2020
6 Based on revenue excluding FX (published financial statements, February 2018); for forex based on number of primary relationships with FX traders (Investment Trends UK Leveraged Trading Report released August 2018).
7 Does not apply to professional traders.
Interesting related article: “What is the Coronavirus?“