Global stocks are rallying on stimulus hopes and are forecast to recover substantially in 2020.
Tuesday saw stocks in the Asia-Pacific regions surge, coming back from major losses on Monday as the number of coronavirus cases jumped, and the oil price war kicked off.
However, stock markets will make a quick rebound on news of stimulus measures being introduced by governments worldwide to help soften the economic blow of Covid-19 and the oil price war.
As U.S. stocks collapsed on Monday, with the Dow Jones industrial average falling by more than 2,000 points, President Trump announced “very major” and “very dramatic” measures will be rolled out.
The President is meeting with House and Senate leaders on Tuesday to talk about an economic relief package that may include a payroll tax cut.
Mr Trump stated during a White House news conference after a coronavirus task force meeting: “The main thing here is we are taking care of the American public. And we’re taking care of the American economy.”
In addition, China’s investment plan involves tens of trillions of yuan including gas pipelines and nuclear power plants.
Elsewhere, in the UK, the Chancellor is forecast to announce a host of emergency steps to support businesses in his first budget on Wednesday.
In Australia, the country’s billion-dollar coronavirus package will likely involve one-off cash payments to certain organisations.
These stimulus packages undertaken by major economies, coupled with the measures being carried out to curb the spread of Covid-19 – such as Italy’s country-wide lockdown and President Xi’s Wuhan visit – will serve to ease market fears.
As they are vigorously seeking out bullish signals, we can expect global stock markets to have recovered considerably before the end of 2020.
As it stands now, investors, including myself, are making the most of this volatility to review their investment portfolios and also drip-feed new money into the market.
Furthermore, an increasing number of investors will be taking advantage of the lower entry points to boost their portfolios in the near-term.
With markets rebounding, it’s essential that investors remain in the markets with sufficient diversification in their portfolios. They should also look into topping up their portfolios sooner rather than later in order to create, build and safeguard their wealth.
Nigel Green is founder and CEO of deVere Group. One of the world’s largest independent financial advisory organizations, de Vere does business in 100 countries and has more than $12 billion under advisement.
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