26 February, 2020

Toward the end of February 2020, equities and other risk assets sold off, and safe-haven assets rallied amid increasing concerns about the novel coronavirus. The virus, now known as SARS-CoV-2, is expected to spread further than was initially anticipated. Over the three trading sessions from February 21 through February 25, global equity markets fell by around 6% while gold increased by over 2%. 1 The US 10-year Treasury yield edged closer to the 1.3% mark, the lowest level ever recorded.

  • The number of cases across the globe has now increased to around 80,239 as of February 25.  Meanwhile there have been 2,700 deaths from the disease.

  • Overall, our base case remains intact – we still expect global economic growth to return to trend over 2020 and 2021, albeit with higher downside risks than previously anticipated.

  • Equities could fall further if the disease becomes a global pandemic and efforts to control the spread further disrupt economic activity. However, equity market investors should look beyond short-term economic disruptions, and the downside could be cushioned by any monetary policy response.

1 For more information on gold, please refer to our latest paper “Gold – You’re Indestructible,” available at https://www.mercer.com/our-thinking/wealth/gold-you-are-indestructible.html

For more insight on Mercer’s investment implications for the Coronavirus outbreak, download the report here.