By Ilana Siyance
Last week, fueled by fears of the novel and notorious corona virus, the U.S. stock market fell roughly 13 percent. The painful market correction was a reminder that China’s probable mishandling of the outbreak will doubtlessly have repercussions around the globe. On Friday, Wall Street logged its largest weekly decline since the 2008 financial crisis. Fear has gripped doomsayers, as the epidemic has now claimed more than 3,000 lives and infected roughly 86,000 people across the globe. China, which is the world’s second largest economy, has seen factory activity plummet at the fastest pace ever recorded, leading to fears of recession.
Experts in Infectious diseases are saying that the COVID-19 virus is highly communicable, but that its mortality rate thankfully has been much lower than other diseases such as SARS, and bird flu. The people most at risk for corona are the elderly and those whose immune systems are already impaired.
The U.S. Federal Reserve as well as the central Bank of Japan have stepped up to reassure the public that they will do what they can to stimulate economic growth. As per Reuters, the Fed is expected to cut interest rates 50 basis points at its next meeting on March 17-18.
As a result, the U.S. stock market seems to be picking itself back up, with green across the boards, in a modest rebound. Before last week’s sell-off, the markets had been at a peak and overbought by most technical measures. As per a recent article in the NY Post, the good news is that bear markets rarely ever begin from all-time highs. Besides for that, this selling frenzy seems not to have lasted long. In fact, historically, usually global health crisis like this have proven to be brilliant buying opportunities in the end.
As per the Post, once the fear of SARS, bird flu, MRSA and Ebola ended, and after the havoc was over, each time the market jumped back up to reach new highs. Of course, any epidemic is always frightful and every caution should be taken to ensure proper health hygiene and travel cautions. But, when the dust clears, hopefully sooner rather than later, from a financial aspect, chances are the time will be looked back at by savvy investors as a big buying opportunity.
While most newspapers focus on instilling dread and anxiety on their readers, and driving market mayhem further, we’d like to hope for the best. Years from now, when the financial market’s history is written, the turbulence will likely be a short term opportunity for a hearty rebound.
