The world as we know it has changed dramatically since the coronavirus outbreak sent shock waves across the entire global economy. A multitude of countries has voluntarily entered a lockdown in a desperate attempt to stop the pandemic spreading.
International central banks reacted promptly. Emergency rate cuts to the zero level (by the Fed and the Bank of England, for example), quantitative easing (by the Fed, the European Central Bank, the Bank of England and the Reserve Bank of Australia), and other monetary stimulus measures have been offered by various policymakers.
Governments have stepped up to the challenge too. Fiscal stimulus from major economies around the world at an unprecedented scale has made financial newspaper headlines over the past couple of weeks.
Regardless of all those efforts, the stock market fell from its bull highs to new bear lows at the fastest pace in recorded history in March. As the business environment has now changed to its core, investors are forced to alter their preferences and strategies before throwing their hard-earned cash at the companies that used to be successful only a few months ago.
Such an uncertain situation brings us to the question: what shares to invest in now that the global indices have fallen dramatically?
In this article, we try to bring some clarity to the issue.
The latest stock market overview
Financial market participants consider a 20 per cent drop from highs as the signal that the market entered bearish territory. Last month, it did that in a matter of a few days, leaving many investors unable to react adequately to the speed of the decline.
However, the market has already bounced over 20 per cent from its March lows. So, where are we? Have we already overcome the worst of the bear downturn and are headed towards another bull run, or is the collapse yet to come?
Despite the central banks and governments' actions, stocks have not recovered as much as they have lost. A late-in-the-month rally was not enough to make up for the damage. Yet, some companies managed to perform better than others.
We have compiled a list of stocks to invest in now if you believe the bear market is over.
Top 5 shares to invest in April 2020
April is expected to be as wild as the previous month. Yet a few businesses have learnt to operate better than others in such a turbulent environment. For those, the opportunities to invest successfully still exist.
Our list of the best shares to invest in April 2020 starts with good old Microsoft.
Microsoft: bouncing from support
It should come as no surprise as with most of the world in lockdown and people forced to stay home, Microsoft (MSFT) products have increased in popularity. Many think of only Microsoft Windows or the Office Suite, but the company features some other remarkable products in its portfolio – for example, Microsoft Teams, which saw an incredible growth boost in March.
Trade Microsoft - MSFT CFD
The market rewarded the firm’s investors by closing last month almost flat. Considering the ongoing slaughter in almost all other companies, this is a remarkable achievement.
From a technical point of view, the MSFT share price seems to have bounced from previous support. Assuming it holds, the focus now shifts to the $175 level.
Walmart: bullish trend intact
The US retail giant Walmart (WMT) managed to reach a new high in March, making it suitable for this list of the best stocks to invest in April. For companies with large liquidity positions, the current lockdown represents an incredible opportunity to build inventory at remarkably low prices.
That is especially true if we consider that China is already up and running at more than 75 per cent of its production capacity. Therefore, companies that move fast may benefit from the first-mover competitive advantage.
Visa: increase in online shopping
The lockdown redefines the way people socialise and spend their money. For that, Visa (V) is one of the companies that have benefited from the current stock market trends. In the first quarter of this year, its stock shed over 14 per cent but bounced with the overall market from previous resistance that turned into support.
If only for safety reasons, online shopping is predicted to experience a large increase because of the restrictions on leaving home likely to be extended for the month of April.
Who is better positioned for such a development if not a company that earns its fees from each and every online transaction made with its debit and credit cards?
Intel: one of the best shares to invest in April 2020
Many employees found themselves forced to start working from home, while the vast majority of schools and universities have started teaching their students online. However, only a few homes were prepared for such a sudden switch.
Not surprisingly, the demand for computers, laptops and desktops has consequently surged. Intel (INTC), as a manufacturer of computer chips, should see its growth outlook improving. Even if we look beyond the lockdown measures, the opportunity to build cheap inventories while using funding at very low to no interest rates should translate into an improved financial condition for the business.
From a technical perspective, the price seems to have ended an expanded triangle. It bounced from the completion of the e-wave and should threaten the pivotal level (see the orange horizontal line) at $57.
Johnson & Johnson: triple top or ascending triangle?
Last but not least on the list of shares to invest in April, Johnson & Johnson (JNJ) stock seems to have formed a triple top around the $150 level. While bears view this pattern as a major reversal sign, it is worth mentioning that in the field of technical analysis, triple tops rarely hold.
It means that the market, usually after the third rejection, starts building energy for a push higher. As a consequence, what seemed like a triple top suddenly becomes an ascending triangle – a continuation pattern, rather than a reversal one.
Short-term forecast for the stock market
The stock market is unlikely to see a major rally based on central banks or governments’ intervention. What the market wants to see is the spreading curve of the virus flattening and, ideally, beginning to descend.
However, given the significant drop in March and the subsequent rally of over 20 per cent from the lows, some companies present decent opportunities to invest in at current levels. The management of those businesses is fully aware of the challenges ahead, but also of the opportunities provided by times like the ones we live in.
The bottom line
Look for the market to consolidate current levels until there is more clarity about the virus and the steps taken after the lockdown. On any positive signs, considering the tremendous stimulus from all over the world, both monetary and fiscal, the stock market has nowhere to go but to the upside.
However, as the financial markets have experienced multiple ups and downs during the past few weeks, we recommend you to arm yourself with as much knowledge as possible. When choosing what stock to invest in, consider the latest news, market trends, expert opinion and technical analysis.
If you think you are not ready to make long-term investment commitments, but still want to try to profit from the market’s volatility, you can do so through contracts for difference (CFD).
You can learn more about CFD trading with free online courses and find out how to trade shares CFDs by reading our comprehensive guide. Always stay on top of the latest market news with Capital.com.