COVID-19 and stock market reaction

Equity markets have fallen sharply amid concerns about the impact on global economic growth of the COVID-19 outbreak and efforts to control it. 

Governments around the world have introduced unprecedented measures designed to slow the spread of the virus and this is disrupting supply chains and hitting business sectors such as travel and hospitality.

While the situation is fast moving and we still do not know the full global impact of the outbreak, we have seen sharp falls in equity markets before, and, although past performance is not a guide to what will happen in the future, it can provide a degree of context.

Stock markets fell dramatically on Black Monday in 1987, during the dotcom crash that began in 2000 and in the 2008 financial crisis. But in each case, they recovered. Other outbreaks of disease, such as SARS and Avian Flu, also triggered sharp falls in share prices around the world – albeit it not on the scale of those caused by COVID-19. Again though, equity markets recovered.

While dramatic moves in the stock market are clearly a concern and it is natural to think of pressing the panic button, history shows that a calm approach, patience and a long-term view have, in the past, resulted in a better outcome.

As at 19/03/2020

Risk Warnings

Capital is at risk. This is not advice. The value and income from investments can go down as well as up and are not guaranteed. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.

Regulatory Information

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