The US stock market was gaining earlier this year even as concerns about the epidemic intensified. That went into reverse on February 20, when the S&P 500 began five-straight days of declines. Since then things like oil and copper, which tend to be linked to economic growth, have tumbled. Other risky assets like junk bonds and, well, bitcoin have also taken a spill. Gold and top-shelf government bonds are among the few assets that are rallying.
“The crisis is hitting growth expectations particularly in Asia and Germany, fears of a pandemic spreading, a supply chain leading to disruption and some inflation at a time when some equity markets were very expensive,” Sebastien Galy, senior macro strategist at Nordea Asset Management, wrote in an email. “Fears of a pandemic are likely overblown in Europe and the US, but it is leading business to re-adjust.”