As the year is quickly coming to an end, investors are asking themselves what lies ahead for 2020 equities. With the pandemic wreaking havoc on markets around the world, the traditional notion of predicting market performance has largely been upended. While no one can accurately predict the future, there are several factors that may give insight into what 2020 has in store for equities.
The election will be a major factor driving equities in the coming months. With both President Trump and Former Vice President Biden vying for the White House, it’s likely that investors will be peering closely at the opportunities that either individual provides the markets. If President Trump re-emerges victorious, investors will be looking for opportunities to capitalize on the potential for further tax cuts and deregulatory efforts. On the other hand, if Former Vice President Biden were to be elected, investors may focus on his proposition for increased government spending.
Something else to consider is the Fed’s response to the pandemic’s fallout. In August, the Federal Reserve announced a sudden cut of its benchmark rate, signaling a shift to a more accommodative stance. This collectively caused the equity markets to surge. Depending on how the pandemic affects economic conditions, the Fed may be forced to take further action, such as launching a strained effort to bring down borrowing costs even further and propping up the economy with further stimulus measures.
Finally, the ever-present fear of a global recession could bring down equity markets in the coming months. As businesses and industries struggle to stay afloat, investors are likely to reorient their portfolios in accordance with the new reality. Additionally, with much of the world in lockdown, latest defense technologies are prone to a future decline, potentially leading to a corresponding decrease in tech stocks and stock prices. All of these factors combined could influence the direction of the equities market by year’s end.
Ultimately, 2020 has proven to be an unpredictable year for equity markets, and investors are finding it difficult to foretell what the next quarter will bring. Of course, no one knows for sure what lies ahead for equities, but with the help of these considerations and some sound economic forecasting, investors have the best chance possible of predicting what the upcoming months may hold.
