Normally, we wouldn’t ask ‘How much do stocks fall during recession?’ or ‘How bad is the stock market right now?’. But questions like that suddenly became very valid when our ministers informed us that the UK economy is going through a crisis unseen for the last three centuries because of the virus. Okay then, what do the stock market and the UK economy look like today? Let’s find that out.
When the virus came in 2020 and brought the stock market plunge, it was a shock. Nevertheless, most people were convinced it would go away soon. Now, a year later since the hit, if you type ‘2021 mar’ in the Google search bar, what do you think it will suggest as the first result? Exactly, ‘2021 market crash’. Covid-19 is not going away: it’s a part of our reality now. Remote work, zoom meetings, online shopping, food delivery, ‘screen nights’… and social lethargy. All that became a theme-and-meme of life in the UK. What about the economy then? Is the stock market doing well right now? Is it bad? Let’s leave that judgment for the Bank of England. So far, we can definitely say that it’s different.
How exactly different?
Media resources vary in opinions but many agree that recovery is underway. One of the indicators for that is consumer activity. Reuters recently cited the British Retail Consortium reporting that total March sales in 2021 were higher than those of 2020 and 2019. In the same report, however, Barclaycard is mentioned saying that debit and credit card spending last month was lower than in March 2019. That means that while the economy is generally recovering, its inner configuration and distribution of money flows shifted. Consequently, the situation in particular market sectors changed in correspondence to that shift.
Preserve-energy mode for people
Generally, products and services related to staying at home see significantly higher demand now. Hence, companies that provide such products and services flourish and enjoy unseen sales, revenues, and profits. People stay at home. A lot of them, a lot of time. What do they do? All the usual but multiplied in quantity. They eat, drink, watch TV, play video games, and do in-house fitness – much more than before. They shop online, order food delivery, order everything else for delivery, and they’re more effective doing all that. They’re trying not to waste food, generally not to waste anything. People became more cautious with labeling what they have as unnecessary and disposing of that. At the same time, they prefer spending less than before on something unnecessary and leaving non-essential purchases for safer days. Virgin Money UK described almost a dozen of habits that all may be described as enhanced by home-staying. Many business enjoyed the fruit.
Virus-demand mode for corporations
Amazon saw a record-making performance in previous quarters because it was spot-on with online shopping and delivery services. Its stock soared. Netflix made never-seen-before sales because people had to sit at home and watch their series instead of outing. Its stock skyrocketed. AstraZeneca saw its stock price reach all-time highs because it’s been in the front line of vaccine production. These are the stocks that surged thanks to the virus. What about business that kept expanding against it? BooHoo is one of them: instead of focusing on outing fashion as they used to do before the virus, they re-oriented towards homewear, and that made their year-on-year April sales rise instead of collapsing like what happened to many of their rivals. There are many other such examples of corporate survival in the new normal brought by BBC in fresh research. The key is adaptation and staying relevant in the new environment: in times of change, it works for businesses just as it does for people. By the way, you can invest in BooHoo as well as in any of the other 300+ assets selected among the London Stock Exchange top performers (you can check them in Investors’ Choice).
Frequently, things gain momentum only when certain life conditions ‘force’ putting one’s attention to them. For example, investing in stocks has always been a reasonable wealth-making and wealth-preservation activity. Also, it’s been a potentially more beneficial alternative to parking your money in a bank at a 3% of annual growth rate standard for most banks’ savings accounts in the UK. But it took the global pandemic to force millions of people in Britain to manage their savings with the use of investment apps. In these terms, Orca may work for them. ‘I can stay at home and save more money’ – that’s what many people realised during the pandemic, and keep realizing now. It’s one of the primary reasons for a huge surge in the demand for investment services in the UK: people are saving money for better days, and there may be no better way to do that than investing in the London Stock Exchange stocks with Orca.
No one saw Covid-19 coming. No one expected it to stay until now. No one knows what happens next. That’s why it’s fundamentally impossible to be certain about what the future holds. However, it’s possible – and utterly important – to adapt and get the most from the opportunities we have around. When will the stock market recover? We can’t know for sure. What we know is that a lot has changed, and a lot will keep changing. As an investment app, Orca was born amidst this change and seeing any tectonic shift as an opportunity to bring to light inner forces and power to make things better.
As with all investing, you may get back less than you put in. Your capital is at risk. Be sure to conduct research on stocks that you want to invest in. If you are unsure of this you should seek advice from a professional advisor. Orca does not provide investment advice.
Orca is an appointed representative of RiskSave Technologies Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN 775330)