Bonds rally, equities nosedive as Coronavirus impact intensifies

With the coronavirus (COVID-19) contagion spreading across Europe, indices have taken a hit in the last four sessions. Investors rushed to safety haven of fixed income and bonds rallied globally as a result. As bond prices rose, yields dropped. The US dollar index, which measures the greenback’s strength against major currencies, have given up gains in the last few trading sessions, but it has been rising against other currencies since December after coronavirus threat started emerging in China.

The stock markets are tanking on fears that companies will have to close operations temporarily, impacting their earnings. Meanwhile, the US has warned of a coronavirus outbreak in its shores. This further led to the fall of equity indices. Kristalina Georgieva, managing director of the International Monetary Fund (IMF) said at the Group of 20 meeting of finance ministers and Central Bank governors in Riyadh that countries must work together to contain the spread of COVID-19, but in any case, it can still have a negative economic impact. “Of course, we all hope for a V-shaped, rapid recovery—but given the uncertainty, it would be prudent to prepare for more adverse scenarios,” Georgieva said.