Negative news on the coronavirus continued to weigh heavily on risk assets with all 3 major US stock markets falling approximately 3% and driving the US 10-year treasury yield to a new record low, touching 1.3055% at one point. The Dow’s 879 point drop caps its worst two-day point loss in history, with the S&P 500 seeing its worst two-day slide since 2015. As we mentioned yesterday, markets at the moment are being headline-driven with an endless supply of bad news. Fuel was added to the fire by the Centers for Disease Control and Prevention (CDC) announcing that there is a ‘very strong chance of an extremely serious outbreak of the coronavirus here in the United States’. Gold also hit its highest level since 2013, at one point trading over USD1674. Yesterday was the 25th consecutive day of inflows, a record.
According to the World Health Organization (WHO), the number of worldwide cases of the coronavirus (COVID-19) continues to rise. In at least 34 countries there are over 80,000 cases and at least 2,700 deaths. South Korea raised its coronavirus alert to the ‘highest level’ after seeing a 20-fold increase in cases over the last week alone. In Italy, one of the worst affected countries outside of Asia, over 130 cases have been reported.
Larry Kudlow, the White House National Economic Council Director, said yesterday he does not expect the Federal Reserve to cut interest rates in a ‘panic’ move to protect markets from the impact of the coronavirus and called for people to be as calm as possible. ‘I don't expect the Fed — I'm not hearing the Fed's going to make any panic move’ he reporters, adding ‘On the economic side, there is no tragedy in the U.S’ however, he added ‘Elsewhere it is a human disaster’.
Elsewhere, a survey from IPC, a global electronics manufacturing association, states that electronics manufacturers are anticipating at least a 5-week product shipment delay from global suppliers due to the virus. The group states that delays in shipping from China and other Asian countries that have been hit by the virus are already having a major impact on producers. IPC's president and chief executive officer, John Mitchell, said the delays will more than likely have a ripple effect on production for the rest of the year adding ‘The longer China is affected by the epidemic, and the more it spreads to other parts of the world, the supply chain will experience more and varied strains and disruptions’.