EC Investors Continue To Look Past The Coronavirus

Overview: The capital markets are heading into the weekend, still trying to look past the coronavirus despite the new cases in Hubei. Tokyo was a notable exception in the Asia Pacific region, as the other major equity markets, like in Hong Kong, China, Taiwan, South Korea, and Australia, advanced. The MSCI Asia Pacific Index rose for the second week. European shares are little changed, and the Dow Jones Stoxx 600 has risen by about 5% over the past two weeks. US shares are firm, and the S&P 500 has gained about 4.5% over the past two weeks coming into today's session. Benchmark 10-year yields are softer on the day, but mostly a couple basis points higher on the week. Greece is a notable exception. Its 10-year bond yield broke below 1% for the first time and is finishing the week near 90 bp. The yield of the 10-year UK Gilt, on the other hand, rose 15 bp over the past three sessions and is paring the gains today. The dollar is little changed against the major currencies ahead of the start of the US session. The dollar appears to be in greater demand in the North American session that other centers in recent days. For the week, the dollar is mixed. Sterling has been the strongest of the majors, gaining a little more than 1%, while the euro has been the weakest, shedding a little less than 1% to fall to new two-year lows. Gold is little changed on the day and week, while oil is snapping 5-week and 20% slide with a 2.4% gain for the March contract.  

Asia Pacific

Hubei province reported another 4823 new cases of the coronavirus after a 14.8 surge when the CAT scan diagnoses began being included the previous day. The point to keep in mind is that the surge represents old cases being properly recorded rather than an escalation of the contagion. Tragically, another 116 people died. Many, including the White House, expressed concern about the transparency from China, noting that US health officials have still not been allowed to enter. The Financial Times quotes a noted epidemiologist in London expressing concern that only about a tenth of the cases may be being correctly detected. In Wuhan, he suggests the undercounting may be more extreme, catching maybe one in 19 infections. 

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Beating Buffett 7 months ago Member's comment

I think the #coronavirus is far worse than people realize or that China admits. More caution is needed until we know more.