What Might A Second Lockdown Mean For Stock Markets?

October 21, 2020

A second lockdown has now been mooted by several senior politicians, including the Labour Party’s leader Keir Starmer. Although the Prime Minister, Boris Johnson, and other senior Conservative Party legislators remain opposed to such measures, they seem to be increasingly likely as the infection rate rises. Here’s what could happen to your stocks, and what we learned from the last lockdown.

Remote Working Platforms May Rise

As in the last lockdown, millions of workers were forced into their residences, leading to many working from home. Whilst this had a significant impact on some sectors, the technology sector saw huge gains.

Platforms such as Zoom became a part of the day-to-day vernacular, and with many made to work from home, their services suddenly saw much more usage. With millions of users pushed onto the platform investors were quick to flock to Zoom Video Communications Inc.

At the start of the year, the stock was at $68.72. It currently sits (at the time of writing) at $518.79 per share. A second lockdown will only push this higher.

Hospitality And Retail

The first lockdown was bad for the hospitality industry. People weren’t allowed to travel or even leave their homes, which did significant damage to hotels and restaurants alike.

In areas such as Liverpool, increasing restrictions are already closing down pubs, and other restrictions may come into force in the coming months. A second lockdown would increase this, stopping people from visiting pubs, restaurants, and shops, likely causing some bankruptcies.

Stocks such as Next and Frasers Group PLC could have significant worries. They have a major reliance on the high street and failing to adequately transfer over to a digital store might lead to subsidiaries collapsing and disastrous stock falls.

General Advice

Put simply, if you’re interested in investing and taking advantage of a coming lockdown, look at what happened in the last lockdown. The stocks that did well are likely to do so again, as well as some new emerging names in these industries, and those that fell may see similar difficulties. The announcement of a lockdown will likely lead to a dip, but if you’re able to use this to pick up promising stocks at a good price, the second lockdown may be a success for you.