Markets outside China rise on hopes rate of Coronavirus infection has peaked

The Big Number
The decline in the CSI 300 from January 20th to February 3rd as coronavirus fear spread through China.  The CSI 300 is a capitalization-weighted stock market index designed to replicate the performance of top 300 stocks traded on the Shanghai and Shenzhen stock exchanges.

What this means
As the epicenter of the coronavirus, China has been especially hard hit, with markets declining nearly 12% over five trading days, including an intraday drop of 9.38% on February 3rd. Globally there is hope that the rate of infection for the virus may be slowing.

Market Notes
Aggressive action by China’s central bank provided support to markets hard hit by virus fears, and the drop in Chinese equities, though sharp, was not as bad as feared.  Other central banks stepped in to provide market support.  Tariff cuts, agreed on in the Phase One trade deal, moved ahead.

The Markets’ Reaction
Outside of China, markets recovered somewhat, led by a 3.2% rise in the S&P 500 (SPX) and a 4.1% jump in the Nasdaq.  Emerging markets (MXEF) climbed 2.8%, while developed markets lagged, up 1.9% (MXEA).  Bond yields rebounded with the yield on the 10-year treasury up 8 basis points.

What to Watch
The rate of infection for the coronavirus is key — is it slowing? In the U.S., the New Hampshire primary is this week, Consumer Price Index data is out on Thursday, and industrial production and retail sales on Friday.

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