Will the Coronavirus cause an Economic Recession?

Updated

During a week when the coronavirus threatened to become a pandemic that hammers global growth. With reportedly 6 % of the world population under quarantine, and probably more as China continues to adjust the reporting goal posts. Yet the US market continues to whistle while walking through the graveyard with the S&P 500 Index advancing four out of five days, posting three records along the way.

Investors are now keenly watching to see how the possible output slowdown could take a toll on US Tech Giants, with the Nasdaq 100 up around 36% this year. Could we finally see the US stock bubble pop?

Note

Despite the negative market sentiment, the NASDAQ 100 has seen an unprecedented surge, rising 36% this year alone. Partly fuelled by Tesla’s astronomical rise in stock price, but also in Amazon, Apple and Microsoft all reporting earnings exceeding estimates.

However, due to the fact that most of the major companies in the NASDAQ have factories in China, the continued shutdown could lead to major disruptions in supply.

But it’s not just supply. Demand is down too due to Chinese customers not being able to leave their homes and spend their money. Apple closed all of their retail stores in China due to the coronavirus, and is only just reopening slowly, albeit for limited hours.

Therefore, it is very possible that the NASDAQ bubble is ready to burst.

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