Equity markets were hit by growing fears over the Chinese coronavirus’ impact on the global economy, as the number of confirmed cases and deaths continued to rise. Though Beijing stepped up measures to curb the outbreak, the news led to money flowing into traditional safe havens. The U.S. 10-year T-Note yield therefore fell below 1.7% on Friday, the lowest since mid-October (1.84% a week ago) and gold futures climbed 0.74%. Investment grade bonds shined similarly (+0.55% in Europe, +0.71% in the United States).
By contrast, the risk-off mood pushed the major stock indices in the red zone. The S&P500 fell 1.03%, the Nasdaq Composite was down 0.79% and the MSCI EMU dropped 0.52% despite preliminary PMI readings that lend credence to arguments that the worst may be behind the eurozone.
Before the Lunar New Year, Chinese markets were logically much more affected by the spread of the virus from the city of Wuhan (Shanghai Composite: -3.22% WTD). The MSCI EM index also nose dived (-2.39%) after the International Monetary Fund trimmed its global growth forecasts, mostly due to a surprisingly sharp slowdown in India and other emerging markets.
Among S&P sectors, utilities led the pack (+2.4% WTD) as was already the case last week. The recent surge in this sector (+6.25% over the past two weeks) shows that investors are growing more cautious. In the same vein, real estate followed suit (+1.01% WTD) alongside with technology (+0.31%) thanks to better-than-expected 2019 earnings from IBM and Intel.
All the other sectors finished in negative territory, energy being the worst performer (-4.25%) as the oil prices retreated sharply (WTI: -7.43% WTD) after the American Petroleum Institute reported that crude inventories rose by 1.6 million barrels last week.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2020-01-24/global