Will 2020 Be An Unstable Year For The Stock Market?

March 16, 2020

In early March, global stock markets took a significant hit. Primarily this was based on the uncertainty brought by the coronavirus, which has not only impacted towns and cities but has now put entire countries on halt, such as Italy. However, whilst coronavirus is one major factor, there are several other events in 2020 that could cause the stock market’s instability to continue.

Oil Price Variation

Between the 5th and 9th of March, crude oil prices tumbled from $46 per barrel to $31, which had major knock-on effects for the stock market. Corporations such as Shell and BP lost billions of dollars of value overnight, but that could easily be regained if prices return to normal.

These fluctuations in oil price have been consistent throughout 2020 so far, and if oil prices don’t stabilise, the markets could be in for a very unpredictable time, making profitable investing difficult.

The Presidential Election

Although it doesn’t seem like long since Donald Trump took office, the 2020 US election is well underway.

The battle for the Democratic nomination is down to Sanders and Biden, and if Sanders were to win, the stock market’s confidence would take a major hit.

After all, Sanders has been a long-term opponent of Wall Street and the financial markets, and would likely impose a greater level of regulation.

Even competition between Biden and Sanders is bound to lead to some uncertainty, and uncertainty in an already faltering market can be disastrous.

A Golden Opportunity

Throughout both the COVID-19 outbreak and the shock taken by markets when oil prices fell, the price of gold has remained consistent and even seen a significant rise, as investors have seen an opportunity to remain stable.

Throughout the uncertainty of the 2008 financial crisis, gold retained, and even increased, in value, so it’s a proven winner for retaining the value of your portfolio in unpredictable time.

Even as a short term investment to ride out the storm, gold seems to be a commodity that rarely loses.

This coming year will see a series of events, some listed above, some completely unforeseeable, that will impact the global economy.

All signs currently point to instability, but in the short term, the best way forward is to keep investing and accumulating, whilst being prepared to divert your portfolio to more stable investments in the case that instability rears its ugly head.