The Coronavirus Keeps Stock Markets Guessing – Fears Increase

The biggest toll of the lethal coronavirus may remain centred in Hunan, China. But the fallout is being felt across the world.

Sentiment shifts from optimism of a potential cure to pessimism of new outbreaks and back on a daily basis. And global stock markets are swinging from gains to losses and back just as fast.

As Australians slept Friday night away, investors largely hit the sell button in US and European stock markets. The Dow Jones Industrial Average closed down 0.94%. The FTSE 100 fell 0.51%.

But the futures markets have ticked over from red to green. If that carries over into Monday’s trading in US markets (overnight our time) it could give the ASX a handy boost tomorrow during this lacklustre earnings season.

Though as you’re aware, it will only take a small dose of negative news on the virus front to see that reversed.

In hopes of gaining further insight into how the coronavirus will play out in Aussie stocks, we turned to the Australian Financial Review this morning. And we were left wanting…

These two headlines ran side by side on the homepage:

Coronavirus Stock Market focus on Earnings

Coronavirus Fears about the Stock Markets

We don’t mean to pick on the AFR. The truth is no one has any clue how this will all play out.

With uncertainty likely to rule for weeks yet, your best bet is not to overreact to daily swings in sentiment over the virus. We’re likely to see more wild moves between fear and optimism before it’s all over.

Don’t panic sell or binge buy on either emotion.

But do make sure you review your risk management strategies. If you don’t have stop-losses in place, now’s a good time to start.

Ed note: While many stocks may have some healthy gains ahead yet in 2020, The Rum Rebellion editor Vern Gowdie is convinced these five stocks are NOT among them. Find out which stocks he recommends you sell IMMEDIATELY, in this free special report here.

Bernd Struben is an Editor of The Rum Rebellion. In this capacity, he has access to one of the most intriguing and powerful networks of practical investment insight anywhere in the world.

Bernd has worked on four different continents, and has more than 20 years of professional finance, editorial, and management experience. He holds a degree in economics.

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