Stock market opens 3.3% lower as coronavirus fear spikes

The S&P500 has opened today’s trading session 3.3% lower than it was yesterday with a sharp drop being attributed to fears of a global coronavirus outbreak.

It closed yesterday’s session at 3,023.94 before opening today at 2954.20, marking yet another miserable start for the US stock market index.

The substantial move to the downside was reflected across all global equity markets with the Dow Jones opening with a 2.56% gap while the UK’s FTSE 100 fell by 3.88%.

There have now been 163 confirmed cases in the UK, a rise of 48 from yesterday which has ignited fears of a global pandemic.

Yesterday, UK Prime Minister Boris Johnson struggled to inspire the public to avoid concern as he urged viewers to “wash their hands” during a TV interview.

This type of approach was blasted by World Health Organisation Director General, Tedros Adhanom, who reiterated that “this is not a drill” before accusing countries of taking too lax an approach to the coronavirus outbreak.

With hand sanitiser and face mask shortages beginning to take hold in the majority of affected countries, fear and panic naturally increases, having a direct impact on capital markets.

If coronavirus cases continue to steadily increase, global supply chains and businesses will begin to suffer as consumer demand continues to reduce.

Optimism will return to the market once the S&P500 breaks above the daily 200 moving average and the level of resistance at 3031.15, although this may only happen if the outbreak begins to slow down on a global scale.

The impact of an economic recession on traditional financial hedges like Bitcoin remain to be seen, it would theoretically rise as investors seek a safe haven from tumbling equity markets, however cryptocurrencies are volatile by nature which could also ignite another gruelling bear market.

Gold has intriguingly rallied back to a seven-year high over the past week which reinforces the notion that Bitcoin could also perform well given a global market collapse.

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