The spread of Covid-19 beyond Asia has started affecting the global commodities market as well as market sentiments.
Base metals suffer the Covid-19 impact
The demand for base metals began sliding when the Chinese markets closed due to the virus outbreak. As the virus spreads beyond China, this set of commodities has remained most impacted, with aluminum, zinc, and copper prices dropping or remaining flat through most of this week. Market participants believe that it is difficult to guage which way the market will go if the uncertainty around Covid-19’s impact continues. The weak demand has resulted in inventories, especially for copper and zinc piling up and increasing the downward pressure on pricing.
US Fed hints at rate cuts
After a week that sent stock markets spiraling downwards, Fed Chair Jerome Powell issued a statement saying that the Federal Reserve was closely monitoring the Covid-19 outbreak and its “implications on the economy.” Furthermore, he said that the US economy remained strong even though the virus posed “evolving risks” to the economy giving a strong hint that rate cuts were not off the table if the virus impacted the US economy.
US stock markets plunge
Stocks on Wall Street are spiraling down after the spread of Covid-19 to the US was confirmed earlier this week. While the administration scrambles to get a team together to contain its spread, stocks have fallen as more and more companies put travel restrictions in place. According to media reports stocks of businesses such as disinfectants, videoconferencing, and pharmaceuticals—especially those making vaccines—are rising while others are getting battered.
Covid-19: Spreading beyond China
China, the epicenter of Covid-19 is slowly limping back to normalcy after more than a month of shutdowns that have impacted the country’s businesses as well as economy. Now, the spread of the virus to Europe, Japan, and South Korea—three big global manufacturing hubs—is likely to impact their local as well as the global economy as well according to media reports. Some economists are saying that Europe and Japan could fall into a recession if the effect of the virus is prolonged. Economists have also revised their outlook on the US economy if Covid-19 spreads in the country from only a slight decrease in GDP growth to a recessionary trend in the case of a pandemic.