How COVID Variant Fears Plague Stock Market Outlook
 
 
 
 
 
 

How COVID variant fears plague stock market outlook

/ 09:53 AM July 29, 2021

You probably think the COVID variants and the stock market are an odd choice for an article. After all, one is related to public health and the other to the economy. Yet, stocks worldwide seem to be “infected” by the coronavirus as well.

Let’s start by going through the COVID-19 variants that have been discovered so far. Then, we’ll explain the factors that affect the stock market. As you’ll see, the coronavirus pulls down the value of shares around the world.

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This article will highlight how important it is to know assets before investing. Real-world events can change how your investments grow, for better or worse. If you understand the COVID variants’ effects on the stock market, you’ll know how to build your portfolio this year.

How many COVID variants are there?

Some people do not understand why the coronavirus gets variants. This is why others claim that it’s a hoax. Yet, other viruses constantly change as well.

As a virus spreads, its copies will change. Some will have better chances of survival while others go away. This is also the cause of the SARS COV-2 variants.

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These changes can either be drifts or shifts. The former involves minor changes to the virus. This means our bodies may still respond to them. Still, it’s similar to the original.

If a virus undergoes a shift, though, it undergoes major changes. This makes it harder to detect. Also, existing vaccines are unlikely to work on them. Shifts could make it spread more easily.

The Centers for Disease Control and Prevention (CDC) seeks out potential new variants. This helps launch a fitting public health response. It divides the COVID variants into three groups:

These 3 Groups Are:

  • Interest – These have a low risk of spreading. Yet, variants of interest could cause a unique outbreak in a small area.
  • Concern – Health officials are concerned about these because they spread faster. Also, authorized vaccines are less likely to work on them. Worse, they often bring worse symptoms.
  • High Consequence – Think of these as worse variants of concern. COVID-19 vaccines and tests are unlikely to work on variants of high consequence.

The CDC is focusing on four notable variants right now. These include the latest Delta type and three others.

Here are a few details regarding each:

  • B.1.1.7 (Alpha) – It was first found in the UK. The Alpha variant showed up in the US in December 2020.
  • B.1.351 (Beta) – It showed up in South Africa in late 2020. Eventually, the Beta type made its way into the United States in January 2021.
  • P.1 (Gamma) – The CDC detected the Gamma type in January 2021. It was first identified in people who came from Brazil.
  • B.1.617.2 (Delta) – It was found in the US in March 2021. The Delta variant was first seen in India in December 2020.

What are the factors that affect the stock market?

What are the factors that affect the stock market?

Let’s now turn our attention from public health to the stock market. It’s where you can buy part of a company or share. Many things can affect a company as a whole.

It’s fitting because the COVID variants are damaging economies worldwide. We’ll focus on economic factors for this article. Here are some of these factors:

  • Interest rates – Central banks increase or decrease interest rates to make sure the economy runs smoothly.
  • Inflation – In general, this means higher prices for consumer goods. People may respond by purchasing less. In turn, companies struggle to earn profit which can lower the value of their stock.
  • Value of the currency – If the US dollar rises in value, imported goods cost more. As a result, Americans will have to spend more to buy these products. This weakens sales and may eventually decrease stock prices.

The COVID variants affect the economic outlook. Investors check how people view the economy. Unfortunately, the coronavirus may dim perspectives for financial markets.

How does the new COVID variant hurt the stock market?

Countries imposed lockdowns to prevent the spread of the virus. This means closing down businesses that promote interaction among people.

This was meant to buy time for the healthcare sector to prepare against the virus. However, it wasn’t enough since it keeps on mutating. That’s why lockdowns are still in place right now.

As a result, many businesses have shut down for good. Millions lost their jobs. If you own a business, that’s not good! With no source of income, they tend to spend less.

Let’s now take an investor’s point of view. These people look for stocks that are likely to grow in the long run. That’s unlikely to happen if most businesses are closed.

Their prices also depend on the number of investors. If investors decide to sell shares, the prices will drop even further! As a result, you will probably avoid most stocks.

You may see the damage in the latest economics reports. Stocks from various sectors took a major hit. Trading for the S&P 500 was down 1.9%.

Should I still invest?

Should I still invest?

As the Delta variant spreads, we may see more COVID-19 cases. In turn, countries may place strict guidelines once again. This will cause the stock market price to dive further.

Does this mean you shouldn’t invest anymore? On the contrary, this could be the best time to start! Lower prices are great if you haven’t bought any stocks yet.

This means you can grab previously expensive shares at bargain prices. Once they go back to their original prices or higher, you’ll gain huge profits.

However, you’ll have to be smart about choosing assets. Get your stocks from the sectors that are growing despite the pandemic. These long-term stocks could even pay dividends.

Also, invest in various asset types. This will help you minimize risk and maximize profits. With that said, you might want to get mutual funds. They try to beat market indexes like the S&P 500.

Don’t get them mixed up with index funds, though. These try to match a market index’s performance. It’s not a good idea when the indexes are doing poorly!

This could be a great time to try the latest asset class called cryptocurrency. Some are investing to hedge against inflation. Also, it’s less likely to be affected by the stock market.

Final Thoughts

The virus that causes COVID-19 continues to mutate. This is why we see more circulating variants. In response, you should get fully vaccinated.

Some protection is better than nothing. The vaccines could give you a better chance against the COVID variants. Your health is one of your most important investments.

Taking care of yourself lets you keep on investing. Aside from getting your COVID shots, it would help if you also reduce your time outdoors. Follow the other COVID guidelines too.

Learn more about the COVID variant and the stock market

What is the latest COVID variant?

At the time of writing, the latest is called the Delta variant. This may have changed by the time you’re reading this. Check online sources for the newest real-time updates.

Why is the stock market affected by the Delta variant?

Stock prices move depending on how companies perform. Those businesses find it hard to earn a profit because of the new COVID variant. As a result, prices tend to go down right now.

Can I still invest in stocks despite the new COVID variant?

It’s a good time to invest in stocks because their prices are much lower now. This could allow you to get shares you otherwise won’t be able to purchase. Still, choose your stocks wisely.

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