The uncertainty around any positive development on a potential Coronavirus slowdown or vaccine persists, and the equity markets have more than discounted the likelihood of major consequences on the real economy.
The S&P 500 has touched its historical highest level and closed at 3345 with it being 4 percent up on the year-to-date. Pharmaceuticals, for obvious reasons, and defensive sectors in general have been the ones that showed more resilience during the nCov outbreak crisis and have been seen to outperform.
Industries that have been highly exposed to China, such as semi-conductors and automotive, have continued to struggle. That said, Tesla suddenly gained more than 60% over the past 6 trading days as optimism about the electric automaker spiked.
However, Tesla announced the virus issue will largely impact their delivery projections in China (stock edged down 7 percent). Consider Tesla currently has a market capitalization of a fraction of Ford/General Motors, whilst it is 43% higher than the gigantic VW (10million deliveries in 2019 vs 500K projected by TSLA).
In the meantime, US Government securities have lowered in yield as sentiment around a potential global health emergency escalated. The Treasuries are still highly bid, although the stock market has more than recovered the slight price correction, meaning that active investors continue to be cautious on the matter. On the same vein, Gold has pulled back, following the stock market, and is still perceived as “good buy” in case of bad news from the WHO.