The risks of a potential coronavirus epidemic has dominated market thinking this week. However the pricing of that risk varied across and within asset classes, and the divergence continued overnight. This could see sharp adjustments as the magnitude of the threat becomes clearer.

Crude oil and Chinese stocks are significantly lower over the week. Industrial metals have largely followed, and the pricing of a drag on growth echoed through bond markets. US ten-year yields are 10 points lower. In contrast the US S&P 500 index is up more than 1% since last Friday’s close after recording another modest rise overnight.

Curiously, gold and currency markets are largely unmoved, although the Yuan has weakened

Uncertainty about the impact of the coronavirus means there is room for differences of opinion. As the impact of Lunar New Year travel on the spread of the virus in China becomes clearer, there will be re-pricing of this risk. While it is impossible to say which markets are correct at the moment there is potential for strong moves as markets realign.

Asia Pacific futures indicate a mixed opening, with indices in Japan and Australia pointing higher and those in China lower. Japanese inflation numbers and European PMIs due tonight could influence trading over the next twenty-four hours.

CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.