Markets React to Coronavirus

We have the following observations about the impact of the novel coronavirus outbreak on markets. First identified in Wuhan, China, in December 2019, cases of COVID-19 continue to climb.

Though this coronavirus presents unique challenges, New York’s hospitals and health systems have extensive experience successfully managing outbreaks. In the past 20 years, they have been leaders in tackling the 2003 SARS outbreak, the 2009 influenza pandemic (“swine flu”), the 2014 Ebola outbreak and others.

The vast majority of cases have been in mainland China. However, with more confirmed cases being reported across the globe this week, concerns have become more widespread, particularly after the Centers for Disease Control and Prevention cautioned about the potential impact in the United States.

As this coronavirus outbreak has spread to six of the world’s seven continents, fear has overtaken the markets, causing extreme selling pressure across equities and commodities. The flight to safety has investors buying bonds, lifting the prices higher and the yields to record lows.

While the spread of this serious global health threat is frightening and the impact on families and communities are on the top of our minds, we encourage clients to maintain an even hand and steady course. Diversification is a key tool in combatting volatility. Diversification, along with consistent rebalancing, can help investors weather periods of heightened volatility.

We have seen several cases of widespread health scares over the years and observed that the initial market reaction has sometimes been severe and widespread, but the disruptions have proven to be brief and high-quality fixed income has provided some stability to portfolio structures.

Want to learn more about COVID-19? We encourage you to follow information provided by these trusted sources:

• World Health Organization
• Centers for Disease Control and Prevention
• New York State Department of Health

We will continue to monitor developments closely and report back as appropriate. In the meantime, if you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.