The pandemic rattled financial markets, pushed dozens of economies into recession, but helped technology firms have a good year.
1. Fed lowered interest rates urgently to save the US economy
In early March, the US Federal Reserve (Fed) suddenly announced to lower the reference interest rate to around 1-1.25%. This was a long-anticipated move, but the Fed did not wait until its policy session two weeks later to make it.
The pandemic subsequently reached the US, but the picture is still very small. However, the Fed acted immediately, as this was the only way to reassure investors that they were not risking Covid-19. Just before that, US stocks had their worst week since 2008. The Fed itself also felt excited about stopping the global recession.
After less than 2, they continued to lower interest rates to 0% – 0.25% – the lowest since 2015. The Fed also committed to buy more government bonds, announced a series of other activation measures. Together maintained the signal line and the United States. This rate is still on hold and has a unique anniversary until 2023. Over the past few months, Fed Chairman Jerome Powell has regularly warned of the US economic outlook in the medium term and late in the process. Government upgrades. The key to speed up.
2. A series of economies fell into recession
Despite the unprecedented easing policy launched to save the economy, from the beginning of the year a series of gloomy forecasts about the global outlook before the Covid-19 shock appeared. Germany, Italy and Japan have slowed down before the pandemic. South Korea is vulnerable to trade reliance. Hong Kong has been in decline since last year. Indonesia’s GDP growth in the fourth quarter of 2019 hit a three-year bottom. Disease will make those problems worse.
This concern has come true. The shutdown of the economy to prevent the pandemic from spreading has pushed dozens of countries into recession this year, such as Germany, Japan, America, Singapore, South Korea, UK, Australia, India … GDP the two numbers even became normal. . US GDP dropped a record 31.4% in the second quarter (adjusted on an annual basis), while UK GDP fell 20.4% q-o-q.
However, in the third quarter, the economies began to recover, at a faster rate than expected. The reason is that the degradation nature does not stem from structural problems and the stimulus policies of the countries gradually take effect.
3. In US stocks, gold price continuously peaked
Earlier this year, Wall Street continuously set a record thanks to the US – China signing the phase 1 trade agreement and China gradually controlling the epidemic. However, the rally has suddenly reversed since the end of February, when Covid-19 began to appear in the US. Confused psychology of investors caused US stocks to record the strongest declines in 10, 30 and 40 years in March. All three major indices sometimes lose more than 12% in just one session.
The world gold price delivered in March also continuously went down, losing nearly 200 USD / ounce. Gold prices are falling as investors sell gold to deposit money for other assets, too.
However, both Wall Street and Gold then had a spectacular comeback. Wall Street took only 5 months to go from bottom to new high, establishing the shortest bear market in the history of US stocks. The market went up for a variety of reasons, from pandemic favored tech shares, the impact of a record stimulus package, Joe Biden’s election predictions to Covid-19 expectations.
The price of gold delivered in August also set a new peak, when it was over $ 2,000 / ounce, thanks to the expectation that US officials will increase monetary stimulus in the context of a high number of infections. The price then decreased slightly, currently only below 1,900 USD, due to information about the vaccine and the political instability of the US to calm down.
4. Crude oil price dropped to negative level for the first time
Crude oil is also a victim of Covid-19. Earlier this year, prices fell sharply due to the double impact from supply and demand shocks. Fuel demand fell sharply because of the pandemic, while supplies rose again after OPEC and Russia did not negotiate to reduce production in early March. In total, in the first 3 months of the year, Brent oil depreciated more than 65%. WTI lost more than 66% – worst in history.
The decline continued into April, despite OPEC’s agreement to reduce oil production to record levels. Part of the reason is that the WTI contract for May delivery is about to expire, causing this oil to continuously depreciate in recent days.
The peak was on April 20, WTI delivered in May to minus 37.63 USD / barrel – the first time in history to drop below zero. Free fall demand, expensive oil reserves made speculators loss and producers are willing to pay to push crude away. Prices then rebounded as the market moved to new WTI contracts and global fuel demand recovered as countries gradually lifted the blockade.
5. Bitcoin to an all-time high
The world’s most popular cryptocurrency had a remarkable year, with a 170% gain. Bitcoin started the year with a fake $ 7,000, but is now over $ 19,000. Last month, the price hit $ 19,920 – well above the old highs of 2017.
Bitcoin’s spike started around October, reminiscent of the 2017 bubble. However, many analysts point out that this year’s developments have many differences. It is clearer regulation of virtual currency in many countries, Bitcoin is more applied in traditional finance, institutional investors and famous billionaires are increasingly interested in cryptocurrencies and potential. power. to prevent inflation when countries launch huge demand stimulus measures during pandemic. Many people even think that Bitcoin can replace gold as a paradise.
6. The sublimation of technology firms
This year, technology stocks are the market’s bright spot, leading the impressive rally of US stocks after hitting bottom in March. Investors expect high revenue and profit growth in this industry Due to the epidemic, the trend of remote work, online shopping – entertainment and the demand for cloud computing has been boosted.
The rise in the price of shares of US technology giants this year.
In the third quarter, sales and profits for Apple, Amazon and Alphabet all exceeded forecasts, with double-digit gains. Facebook recorded an increase of 2.74 billion monthly active users.
The skyrocketing stock has helped the capitalization of Apple, Alphabet, Microsoft and Amazon surpass the $ 1 trillion mark. Apple was also the first company to have a market value of over $ 2 trillion. Shares of Netflix, Tesla, Square, PayPal, Nvidia and Adobe all peaked this year. Other stocks that benefited more from the blockade such as Zoom Video or Slack also gained strongly.
7. The US tightens its control on Chinese technology giants
Last year, the tech tensions between the US and China mainly revolved around Huawei Technologies. But this year, the US has acted aggressively with more Chinese businesses.
In early August, amid rising tensions between the two countries over a wide range of issues, from Hong Kong to the pandemic, US President Donald Trump signed a decree banning US companies from trading with TikTok, WeChat and its parent company. their. This app is ByteDance, Tencent for national security reasons. The restraining order goes into effect after 45 days.
A week later, he continued to sign a separate decree for ByteDance, requiring the company to split its US business after 90 days. Under pressure from the Trump administration, ByteDance then reached an agreement with Oracle and Walmart to transfer US business. Although Trump expressed his support for this deal, the Foreign Investment Commission in the US (CIFUS) has not officially approved. The US government then repeatedly extended the ban with TikTok, also failed to comply with the decree forcing US TikTok to sell itself, causing the future of this application in the US to be suspended.
On December 3, the US added China’s largest chip company, SMIC, to the blacklist of businesses owned or controlled by the Chinese military. Earlier, Ant Group was also said to have caught the eye due to the concern that the payment company would provide the Chinese government with important personal data of US users.
Ha Thu (general)