The Major Markets saw red again last week as the coronavirus outbreak continued its spread across the globe. The MSCI Emerging Market Index experienced the largest drop as it fell an astounding 5% by the end of the week. Last week’s losses were so significant that it took all but the Nasdaq composite into negative territory for the year, wiping away the early January gains.

After reporting over 4,200 cases of the Wuhan Coronavirus last Sunday, China’s National Health Commission reported ever increasing numbers with each passing day to arrive at over 20,000 cases this week with the death toll now surpassing 420, including the first reported death outside of China.
The Coronavirus situation is important to watch, not because there is a likelihood of an immediate exposure currently, but because of the impact as well as the feared impact of the virus to the global economy.  An indication that the global economy may already be slowing has been seen in base metals. Last week, the S&P Base Metals indices experienced another significant pullback. YTD, the losses in metals now range from -2% to -10%.
Over the weekend, the People’s Bank of China announced that they would lower the seven-day reverse repo rate and also injected 1.2 trillion yuan, or approximately ($173 billion US dollars) into money markets. Furthermore, the China Securities Regulatory Commission implemented a temporary ban on short-selling to help calm the market from a feared selloff.
However, Chinese markets reopened Monday morning local time only to see the Shanghai Composite fall 7.7%. In fact, over 3,250 stocks on the Chinese exchange traded down to their limit before breakers went into effect to prevent further selling.
Back stateside, the United States began a travel ban on Sunday night at 5:00 PM ET which temporarily denies entry for any foreign national who visited China within the last 14 days. Numerous other countries have also followed suit. Some countries like Canada, have advised their citizens not to travel to the region and have seen their largest airlines suspend flights to china for the month of February.
The flight to safety was evident in the yield curve again last week. After a substantial drop in the 10-year to 1.70% on the 24th, the 10-year yield closed out the first month of the year dropping down to 1.51%.


U.S. (2020). China moves to limit short selling as virus looms over market reopening. [online] Available at: https://www.reuters.com/article/us-health-china-shortselling/china-moves-to-limit-short-selling-as-virus-looms-over-market-reopening-idUSKBN1ZW0P2 [Accessed 4 Feb. 2020].

Bloomberg.com. (2020). China’s Worst Rout in Years Has 3,257 Stocks Falling by Daily Limit. [online] Available at: https://www.bloomberg.com/news/articles/2020-02-03/trading-china-s-worst-rout-in-years-with-3-257-stocks-limit-down [Accessed 4 Feb. 2020].

Laura He, C. (2020). Chinese stocks plunged 8% as coronavirus fears took hold. It's the worst day in years. [online] CNN. Available at: https://www.cnn.com/2020/02/02/investing/china-markets-coronavirus/index.html [Accessed 4 Feb. 2020].

Dakin Andone, C. (2020). US travel restrictions go into effect to combat coronavirus spread. [online] CNN. Available at: https://www.cnn.com/2020/02/02/us/coronavirus-us-travel-restrictions/index.html [Accessed 4 Feb. 2020].


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