The fall in global equity and oil prices seen on Monday – and a simultaneous surge in the gold price – shows how investors have been complacent with regards to the coronavirus.
The disease – which has spread outside of China – is impacting global markets in a way that was “underestimated”, according to Nigel Green, chief executive of deVere Group.
“In general terms, stocks have hardly been deterred by the corona virus outbreak. This complacency is concerning,” he said.
“This is because many investors remain complacent about the far-reaching impact of the corona virus, which is continuing to spread – and at a faster pace. This will inevitably hit financial markets and investors’ complacency leaves many wide open to nasty surprises.”
The spread of the corona virus in Italy is particularly worrying since the country has not identified the so-called patient zero who spread it. South Korea now has 977 confirmed cases to Italy’s 232, according to the Covid-19 tracker from Johns Hopkins. Mainland China has 80,242 confirmed cases.
Rupert Thompson, chief investment officer at UK wealth manager Kingswood, said “The recent spread of the virus outside of China, with Korea and Italy both now imposing quite radical containment measures, has spooked equity markets. It has also fueled further gains in safe havens such as gold and US Treasuries.”