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The US market fell by 13% in the indices in less than a week (refer to the chart above).
Oil, on the other hand, fell to almost $ 45 (chart above).
The reason is obvious, the coronavirus epidemic has spread beyond China. Currently, there are already 2,000 reported cases in South Korea. While there are 650 cases in Italy.
The epidemic and the economy
Those who are concerned about its direct threat to humanity can rest assure that there is no direct threat. Mortality from a new virus is no more than from ordinary flu - elderly (very elderly) people weakened by diseases die from complications. Mortality does not exceed 3.5% of cases.
But for the economy, the consequences can be very serious, as huge losses will be incurred - tourism, air transportation.
Clearly, there will be a decline in China in the 1st quarter. Although it is not yet clear if how much will this affect the economy of the USA and Europe, considering that the epidemic growth is till contingent.
The major problem of the market will be the monitoring of the epidemic as it has now spread outside of China. As of now, the Chinese authorities managed to reduce the number of new cases to down to 400 per day. This means that the total number of patients, in China alone, is slowly reducing also taking into account the recovering patients.
However, markets in South Korea, Italy, and Iran remains to be alarmed of the situations in the said countries.
If the epidemic grows, the threat of a new big crisis will arise.
Do not rush to buy the US market, despite the fact that prices have become much more engaging.
Euro, on the other hand, is growing. This is not entirely logical since the dollar will at some point become a common refuge. Nevertheless, we have what we have.
You can buy the euro at a break of 1.1100 and up.
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