Impact on Financial markets due to Coronavirus.
                     Impact on Financial markets due 
to Coronavirus
Freefall
The financial markets have been under much 
pressure, volatility and uncertainty since COVID-
19. At the end of February 2020, the global 
equity markets were in a freefall. Referencing 
financial data, current and historical, the pace 
that COVID-19 is spreading is much faster than 
prior epidemics (SARS, swine flu) in a limited 
time frame. 
Fall in demand
The effect of imports to China have directly 
affected the export economy of countries around 
the world. This has an immediate effect within oil, 
LNG, agricultural goods and metals. In oil, 
demand from China, the largest net importer of 
crude oil, took away nearly ten percent of global 
demand in January.
Source: Google Images
Global slowdown
In just weeks, the Coronavirus pandemic has 
shaved off nearly a third of the global market 
cap. The Indian equity market bounced back 
valiantly, but the Sensex still closed 20% below 
the peak achieved two months ago. Investors 
can get some cold comfort that other markets 
have fallen more.
Source: Google Images
Impact in Asia
The deepest cut to the Asian regional economies 
remains with China. Japan continues to find solid 
footing and this outbreak has pushed it off 
course. For what it’s worth, Japan continues to 
fall upon unfortunate timing, as it was looking for 
a boost from the 2020 Olympics. South Korea’s 
increase in cases poses another threat to the 
once strong oil and natural gas market.
Source: Google Images
Crude oil war
Making things worse is the crude oil war between 
Saudi Arabia and Russia, which has injected 
volatility into other assets. Earlier, only the 
equity and debt markets were impacted by the 
Covid-19 scare; now the commodities and 
currency market are in turmoil due to the crude 
oil war. America’s WTI crude index prices went 
negative for the first time in history.
Source: Google Images
Huge impact
Impact of this on global economic growth is 
going to be huge. The Organization for 
Economic Co-operation and Development 
(OECD) has halved the global gross domestic 
product (GDP) growth projection for 2020 due to 
Coronavirus. The disease will obviously impact 
the Indian economy as well
Source: Google Images
Impact in India
The domestic consumption slowdown, triggered 
by the failure of large financial institutions such 
as IL&FS and DHFL, is still lingering. Now we 
have another situation in the form of the Yes 
Bank crisis. Though only time will tell how the 
Yes Bank fiasco will shape up, the revival 
package for the bank is a good short-term step.
Source: Google Images
Gold is unstoppable
While other commodities are down, gold has 
gone up because of the demand for a safe haven 
in uncertainty. The hope of rate cuts by global 
central bankers is also keeping gold demand 
intact. Though initial target for gold was $1,700, 
it can go up to $1,800 if Covid-19 is not 
contained soon and central bankers are forced to 
come out with more rate cuts
Source: Google Images
Falling markets, rising 
volatility
The Dow and S&P 500 have both been seeing 
drops due to uncertainty around the global 
coronavirus pandemic since the middle of 
February as the virus began to spread around the 
world. The coronavirus has created such 
uncertainty around the world that two of the 
largest single day drops in the Dow Jones 
Industrial Average have been from March of 2020.
Source: Google Images