Corona virus affects the markets

The fears of the new corona virus are starting to dominate the markets. The oil price has dropped more than 10 % during the last week due to the uncertainty.

In the beginning of the year, rumors about an outbreak of a new variation of the feared corona virus in China started to form. Since then, more than 5.000 cases of the virus have been confirmed, and it has been confirmed in both other Asian countries, in the US and in Europe. The international markets are concerned.

During last week, we have seen losses across both the financial markets and on the oil market, losses that have been attributed to the corona virus outbreak. Since the world by last week started paying serious attention to the virus, the oil price has dropped more than 10 % and a barrel of Brent oil is now trading below 60 USD for the first time in more than three months. Meanwhile, the stock markets are reacting negatively as well. For instance, the pan-European Stoxx600 Index was down 2 % Monday, after declining steadily last week as well.

The virus outbreak brings out memories of the SARS outbreak back in 2003, an event which caused whitespread panic and losses across the markets. The memory of this event is probably the main reason behind the current reactions. The fear that the global economy will be affected by a large-scale spread of the virus is dominating, despite the fact that no actual evidence suggests this scenario is near.

It is now decisive for the markets to get a feeling that the Chinese authorities take all necessary steps to stop the virus from spreading further. Otherwise, the fears could very well escalate further and cause losses across the markets during the coming weeks as well.