Fintech Unicorn SoFi notes in its end of year review that we just experienced the “longest bull market run in history.”
The SoFi team states that 2020 has been quite a memorable year. During these unprecedented times, due to the COVID-19 outbreak, industries have been focused on adapting to changing consumer behavior or habits, global financial markets have been fluctuating, and people have spent many hours on Zoom, the SoFi team wrote in a blog post.
They pointed out that when the first quarter of the new decade began, US stocks had been in “the longest bull market run in history and many people around the world had never heard of the coronavirus.” The bull market kept going until the COVID-19 outbreak in March 2020, when the markets crashed. There was also an oil price war, causing stocks to tumble, SoFi confirmed.
Despite historical monetary initiatives from the reserve bank and various fiscal packages from the US government, the first quarter of this year was notably the worst-performing Q1 in history for the Dow Jones and the S&P 500. It was the worst quarter for the Dow Jones since 1987 and the worst for the S&P 500 since the global financial crisis of 2008, SoFi revealed. During Q1 2020, the Dow Jones dropped 23.2% ending at 21,917. Meanwhile, the S&P 500 fell by as much as 20% and the Nasdaq composite index fell 14.2%, SoFi noted.
As stocks continued to fall in Q1 2020, the price of oil fell dramatically as well. Governments across the globe began imposing strict lockdown measures and travel restrictions were put in place in order to prevent or curb the further spread of the Coronavirus. Many professionals began working remotely from their homes and consumed less gas in their cars. People throughout the world canceled business and leisure travel plans, which led to a significant drop in jet fuel prices, SoFi confirmed.
The Fintech firm further noted that as demand for oil declined, supply surged due to a price war between Saudi Arabia and Russia which led to the former flooding the global markets. This resulted in even lower prices for the commodity. At the end of Q1 2020, the International benchmark Brent crude had been trading at $22.71 per barrel, a 64% decline from early January 2020.
Because of the rising uncertainty in the oil and equity sectors, “many investors rushed to sell their riskier assets and invest in US government bonds,” SoFi noted. As a result of this activity, the 10-year Treasury note dropped to a record of 0.318% at one point during Q1 2020.
By the end of the Q1 2020, some people thought that shutdowns and the COVID-19 pandemic would subside, however, the next three quarters of 2020 had even more upheaval in store, SoFi noted.
While many sectors struggled and even had to permanently close down their operations, certain Fintech industry businesses have done really well. Some prominent financial technology companies have also attracted large amounts of funding this year because it’s expected that the demand for their products and services will continue to grow rapidly in the coming years.
North American and European Fintech firms attracted substantial funding in 2020 but the number of deals declined, according to a new report.
As covered recently, Fintech deals and dollars could see a decline this year from 2019 despite the Q4 2020 recovery, a recent report reveals. Meanwhile, in Asia, Singapore based financial technology firms secured the most funding compared to all other ASEAN region Fintechs.