Wall St. Shrugs Off Risks Related to Viral Outbreak in China

Overnight, investors fled riskier assets like stocks and oil and turned instead to investments that are considered safe havens like gold and Treasury bonds. Major benchmarks in Europe and Asia were down more than 1 percent. Prices for key industrial raw materials such as crude oil, copper and iron ore all fell.

“What you’ll see take place is a significant further slowdown in Chinese economic growth, and Chinese growth has been so important,” said Edward Alden, a senior fellow at the Council on Foreign Relations. “You’re already seeing this in commodities prices.”

In the bond markets, yields on longer-term United States government securities fell below those on shorter-term Treasury bills, an unusual situation known as an inversion that is considered one of the more reliable indicators of economic recession.

“An inversion suggests the market is sniffing out some future trouble, and is a well-known signal in financial circles (and so gets a lot of attention, which can affect confidence),” Don Rissmiller, chief economist at Strategas Research, wrote in a research note spotlighting the phenomenon.

But Wall Street’s recovery suggests that investors still doubt global woes will wash up on American shores. And they seem to have little reason to worry. The American labor market remains strong, and growth, while unspectacular, has been steady.

Article source: https://www.nytimes.com/2020/01/30/business/stock-market-today.html?emc=rss&partner=rss