On Friday, February 28, the World Health Organization raised the global risk level of the Coronavirus from high to very high. As the virus continues to spread, our managers and our CEO Peter Kraus share their thoughts on the virus’s potential impact on markets and the global economy.

Stock Market Drops on Coronavirus Fears

The S&P 500 index dropped 0.82% on Friday to conclude its worst week since the financial crisis in 2008. The Japanese Nikkei 225 saw a weekly decline of 8.23%, as Prime Minister Shinzo Abe announced a month-long school closure following the declaration of a state of emergency on the island of Hokkaido last week. In Europe, both the FTSE 100 in the UK and the DAX in Germany plunged almost 4% on Friday while the virus accelerated its spread across the continent. As investors looked for safe havens, the 10-year U.S. Treasury yield fell to a record low of 1.30%, while yields in recession-prone countries such as Italy and Greece increased. 

Aperture CEO Peter Kraus elaborates and shares his outlook on what we might expect in the coming weeks:

As COVID-19 spread beyond Asia, the market reaction has been swift. It was less than a month ago on Jan. 31 that portfolio manager Peter Marber pointed out that while markets had thus far only reacted mildly to news of the Coronavirus, there was still a lot we did not know:

“Markets have held in relatively well on the news of the Coronavirus outbreak in Wuhan, partially because the Chinese markets have been closed for almost two weeks… With that said, there are still a lot of unknowns.”

Peter Marber, Jan. 31, 2020

And now, only four weeks later, we face record volatility and an uncertain near-term future. Simon Thorp shared his thoughts from London about option strategies, bond yields, and comparisons to 2008:

Viral Volatility

As Coronavirus panic tightens its grip on global markets, the Cboe Volatility Index (VIX) reached its highest point since 2011 on Friday at 49.48.

How will investors react? Where might the pitfalls and opportunities lie? Anis Lahlou in London looked at volatility, and the potential impact on individual businesses: