Are the stock market declines inevitable?

Team Veye | 09 Mar 2020

Are the stock market declines inevitable?

Amidst the continuing string of deaths not only in China, falling stock markets and emergency rate cuts by banks, but it is also time to consider the ultimate economic impact of the coronavirus globally.

The widespread damage is not limited to the only disruption of the global supply chain thus causing wholesale shortages. Many other sectors including the travel and hospitality industry have also felt the heat.

The Governments worldwide have responded to this challenge on a war footing. With all the precautions and preventions everywhere, the good news is that the number of new cases in China has begun to fall.

The market fall had somewhat retreated earlier on the prospect of coordinated policy action from the world’s big economies. Central banks of Australia and Malaysia cut interest rates on Tuesday last week. The Bank of Japan also injected liquidity into the country’s financial system with the Bank of England showing its readiness to support the economy.

After the Federal Reserve’s interest rate cut failed to cut much ice, market participants turned up the heat on it to do even more. Fed policymakers may allay some fears, along with forecasts for economic growth, at the end of their March 17-18 meeting.

The Fed has a long history of coming to the market’s rescue with rate cuts and stimulus. This should, hopefully, instill some confidence in the market.

The action by central banks world over may not provide an immediate remedy to the affected sectors and broken supply chains but may help support overall economic activity.

While nobody can predict the exact behavior of the stock market, we all know it has its ups and downs. Sometimes unexpectedly though.

For investors and medium-term traders, such things could be a non-issue. In the past many years, almost all the markets have had significant drops, neither of which was lasting. In fact, some of these have registered handsome gains.


Veye Pty Ltd (ABN 58 623 120 865) authorised representative (AR No. 001261006) of Global Merces Funds Management Ltd holds Australian Financial Services License (AFSL) No. 460883. Veye is authorised to share only generic financial views through its website, reports and newsletters without keeping into consideration your personal financial needs or investment objectives. Although Veye takes utmost care about the accuracy of the content and ensure that the information is gathered and processed through reliable resources but it is recommended for you to seek professional advice from your financial advisor or stockbroker before acting on any of our content or taking a final decision on your investments. Veye Pty Ltd advises it’s users to pursue investing as a long-term goal. Stocks are subject to real time changes therefore all the information we share represents our views at the date of publishing and we request our readers not to interpret our reports as direct recommendations. Future Performance of any Security/Financial Product cannot be assured basis its past performance. The securities and financial products we study and share information on in Veye Reports may have a product disclosure statement or other offer document associated with them. You should obtain a copy of these before making any decision about acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide as per your convenience. Veye Pty Ltd confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report (mentioned on the website).