One minute read. Written by Agastya Sharma, a grade 6 student
Jack and Jill went down the hill. So did the world’s stocks and shares.
What are stock markets?
Stock markets are places where companies or people can sell or buy stocks or securities to others. The major markets of the world are the New York stock exchange, NASDAQ, Nikkei, and so on. A stock is like a part of a company. Each person with a stock of a particular company is called a shareholder. If a company does well, the stock evaluation increases. The opposite can also occur. When a person sells his stock, he earns the amount of money that pertains to the stock value.
How do stock markets function?
Stock markets work on a basic principle of supply and demand. For example, if a 100 people try to buy 20 stocks [in this case, the demand is more, and the supply is less] the prices will increase. Or if the situation is the opposite, the prices will dip.
How is the Coronavirus affecting the stock market?
The coronavirus is simply stirring fear into the hearts of investors. The feelings of investors can often control stock prices as well. If an investor feels that a business is doing well, he will buy shares of that company and vice-versa. Since the investors are too scared to put their money anywhere, the supply of stocks increases, thus decreasing the stock price. Also, the virus is making businesses close down, which impacts the stock market heavily. If businesses close, then all of the stocks of that company qualify as null. The coronavirus could have caused more unemployment than in the Great Depression and the Great Recession together. That would do wonders for the markets, wouldn’t it?
Also increasing the woes of the stock markets is the ongoing price war for oil between Russia and Saudi Arabia. As the prices are dipping, and as the stock in question is oil, the world’s stocks will see a huger fall than ever before. Sensex closed 20% lesser than the peak it reached two months back.
The stocks of the world need the virus to die, or all our parents, to their money, can say goodbye.
Written by Agastya Sharma
Agastya is a grade 6 student who is passionate about reading and writing.