What’s Ailing The Markets?
The outbreak of coronavirus has been a shock to both supply and demand in China. Restrictions on travel and other public health measures have hurt the service sectors of the economy, while many factories have been forced to close as authorities try and contain the public-health risk. Tourism in China has, for the most part, come to a halt, and global supply chains are being disrupted. As a result, some are starting to reign in forward-looking expectations. Goldman Sachs recently lowered its Q1 GDP tracking forecast by two tenths over the past week to 1.2%.
It’s noteworthy that while the number of cases outside of China is starting to rise, the number infected within China has begun to stabilize over the past few weeks. While countries still need to prepare, the World Health Organization clarified that coronavirus has not reached pandemic levels yet. Johns Hopkins University has an interactive map that lets you track the spread of the virus in real-time:
Global leaders are stepping up efforts to address the issue; the White House will be requesting $2.5 billion from Congress to combat the virus. Meanwhile, the first batch of experimental coronavirus vaccine from US drugmaker Moderna has been shipped to the National Institute of Allergy and Infectious Diseases to begin testing.
The good news is this could be temporary. Like the SARS scare in late 2002, the increased level of volatility from the coronavirus could be viewed as a potential buying opportunity in a market that, prior to the last week, has been very resilient. We’ll continue to monitor the news for indications of broader impacts and share any developments with you.
