Whatâs Going On Here?As the pandemic starts to resurface, investors are getting out of the water pronto: they sold off shares around the world on Monday. Du-nuh⌠Du-nuh⌠What Does This Mean?Coronavirus is on the rise again: the UK, to take one example, reckons itâs on track for 50,000 new cases a day by mid-October if no actionâs taken. So to avoid that sort of spread and the death toll thatâd likely follow, countries might be forced to roll out new regional or national lockdowns. And given that the last ones led to the worst-ever contractions in giant economies like the US and eurozone, itâs perhaps no surprise that investors â most of whom were anticipating an economic recovery by now â ditched the stocks most likely to feel the effects of another slowdown. Or, if things get really bad, another halt on economic comings and goings altogether⌠Why Should I Care?For markets: A leisurely selloff.
Among the worst-hit stocks were those in the travel and leisure industries. No surprises there: hotels, restaurants, and bars are all facing costly restrictions on business hours and service etiquette â if they can stay open at all. Airlines, likewise, will earn less money if all-but-essential travel is stopped again. Thatâd be why shares of British Airways owner IAG fell 12%, while even low-cost carriers Easyjet and Ryanair â whose short-haul routes are expected to recover more quickly than their larger rivalsâ long-haul trips â were down 8% and 5% respectively.
The bigger picture: When they zig, you zag.
The USâs key stock market index fell to its lowest level since July on Monday, perhaps reflecting concerns that Europeâs resurgence will spread Stateside or hurt American companies that have large international segments. Some analysts might say itâs about time to start looking elsewhere for opportunities â like, say, smaller American companiesâ stocks, or those outside the States altogether. | 