Coronavirus Threat To Global Growth Is 'Real' And Shouldn't Be Ignored, Analysts Say
Fears of coronavirus contagion sent global stocks tanking Monday after reports of virus outbreaks from countries outside of China, even as the number of the reported cases dwindled in the country of origin.
Coronavirus Fears Compound
The sell-off reflected investor fears that global growth is likely to be impacted in a meaningful way due to fears of the coronavirus, according to Chris Zaccarelli, Chief Investor Officer at Independent Advisor Alliance.
Equities, which had thus far weathered the virus impact, sold off following deaths reported in Italy and a panic wave that began sweeping through Europe. The analyst views the threat arising from COVID-19 is real and should not be ignored.
The sell-off, according to Bankrate analyst Greg McBride, is a result of large institutional investors' tendency to sell first and ask questions later.
"Investors are growing increasingly concerned about the hit to global economic growth and corporate earnings that coronavirus will bring," he said.
Related: Gold Surges To 7-Year High As Coronavirus Cases Rise Internationally
Short-Term Impact?
"Ultimately we will move past this challenge and the economic expansion will continue in 2020," Zacarelli said.
Consequently, the analyst believes the stock market is going to move lower in the short run before bottoming and going back to all-time highs again. Bankrate holds a similar view. McBride suggests short-term concerns should not cloud long-term thinking and prompt a knee-jerk reaction.
"Stay the course, and if you've been waiting for a better buying opportunity, the stock market is 3 percent cheaper today than it was Friday," he said.
The analyst also sees the drop in bond yields presenting an opportunity. This is expected to bring mortgage rates down.
"Knocking $150 off your monthly mortgage payment creates valuable breathing room in the household budget," the analyst said.
The S&P 500 was down about 3% to 3,232.95 at time of publication Monday afternoon.
A street scene in Guangzhou earlier this month. Photo by zhizhou deng via Wikimedia.
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