Have the markets underestimated the global epidemic?
The uncertainty around the numbers of deaths and infections were acknowledged as Chinese officials declared that their methods of confining and reporting infection numbers had led to mistrust. Adjusted numbers now suggest that new deaths had increased by 1109 on Friday, sharply up from the 349 new cases reported on Thursday.
This after China’s Consulate General in Pakistan had said that “the peak of the epidemic (had) already arrived”.
As more cases are also reported in other countries such as Italy, Lebanon and Japan, Bloomberg reported that US and other emerging market stocks started to contract strongly, while treasury yields had tumbled and gold surged to new two-year highs. Gold bullion traded on Friday on levels higher than $1 644 (R24 644), an increase of more than $25 alone on Friday.
The Dow Jones industrial index had lost more than 300 points last Thursday and Friday, whereas the S&P 500 was down by more than 1 percent and the Nasdaq by -1.4 percent. Domestically, market sentiment continued to be nervous, not only on the coronavirus uncertainty, but all more so on negative perceptions around the Budget speech on Wednesday. More and more economists are of the opinion that VAT will be increased by at least 1 percent.
Source: iol.co.za
