The impact of coronavirus on the global market

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.

Coronavirus Outbreak Update: Investment Implications

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