February 2020

• Global markets experienced one of the sharpest monthly sell-offs since the financial crisis in February 2020 as the coronavirus outbreak spread rapidly beyond China.
• Equity markets globally fell sharply amid fears of severe economic disruption, supply chain breakdowns and collapsing consumer demand.
• Investors rapidly moved into safe-haven assets, driving bond yields to record lows.
• Central banks signalled readiness to provide liquidity and economic support if conditions worsened further.
• Emerging markets weakened significantly due to global growth concerns and capital outflows.
• Oil prices collapsed as expectations for global demand deteriorated sharply.

Asia (ex. Japan)

Asian markets outside Japan experienced significant volatility during February as the coronavirus outbreak spread throughout the region and increasingly disrupted manufacturing, travel and consumer activity. Chinese authorities introduced extensive fiscal and monetary support measures to stabilise markets and support affected industries.

Technology and export-oriented economies such as South Korea, Taiwan and Singapore came under increasing pressure as global supply chains weakened and business activity slowed sharply. Investors became increasingly concerned about the broader economic impact across the region.

Europe

European equities declined sharply during February as coronavirus cases spread rapidly across Italy and other parts of Europe, triggering fears of widespread economic disruption. Travel, leisure, banking and industrial sectors were among the hardest hit.

Economic activity slowed dramatically toward month-end as governments began implementing restrictions aimed at containing the outbreak. Investors increasingly anticipated significant monetary and fiscal intervention from policymakers.

United States

U.S. equities experienced a historic late-February sell-off as investors rapidly reassessed the economic impact of the coronavirus outbreak. Major indices recorded some of their fastest declines in modern history as fears surrounding recession and corporate earnings intensified.

Treasury yields fell to record lows as investors sought safe-haven assets and priced in aggressive Federal Reserve rate cuts. Technology, travel, energy and financial sectors all experienced severe volatility.

United Kingdom

UK equities fell sharply during February as coronavirus concerns intensified and investors anticipated significant disruption to global and domestic economic activity.

Sterling weakened alongside rising market volatility, while expectations increased that the Bank of England would need to introduce additional monetary support measures if economic conditions deteriorated further.

Japan

Japanese equities declined significantly during February as slowing global trade, tourism disruption and coronavirus fears weighed heavily on exporters and cyclical sectors.

The stronger yen during periods of heightened risk aversion further pressured corporate earnings expectations. The Bank of Japan signalled readiness to provide additional support if necessary.

Emerging Markets

Emerging markets weakened sharply during February as global risk aversion intensified and investors withdrew capital from higher-risk assets.

Asian economies were particularly affected due to their close trade links with China, while commodity-exporting countries faced collapsing demand expectations and sharply lower energy prices.

Commodities

Commodity prices collapsed during February as investors anticipated a severe slowdown in global economic activity due to the coronavirus outbreak. Oil prices experienced particularly sharp declines as demand expectations deteriorated rapidly.

Industrial metals also weakened significantly due to fears surrounding Chinese manufacturing and global trade activity, while gold prices initially rose strongly before experiencing volatility as investors sought liquidity.