The coronavirus is not the first and certainly not the last drastic pestilence that infects the modern world. The dead rise to 910, exceeded the number of victims of the Sars, the infected break through 40 thousand. The situation remains “very serious”, says President Xi Jinping. According to the Independent, the incubation period could extend to 24 days, 14 more than indicated so far.
Globally, the Oms alarm is sounding, which does not rule out an acceleration of the epidemic outside China. Cases of transmission from people who have not recently travelled in the country could be just “the tip of the iceberg”, says the World Health Organization.
How has this affected commodity markets?
Only in January, the CRB Commodity (an index representative of the performance of the commodities sector) lost about 8.5%, the largest decline since December 2018.
It is interesting to analyze how the commodities sector (specifically the copper market) has also moved in the previous health crises that occurred in past years, starting from September 1994 with the lung plague to the current “coronavirus” (January 2020).
Below is the graph of copper on a monthly basis:
Analyzing the table, it can be seen that the average of the 13 most important epidemic cases had the copper corrected in the first month in which the event occurred (-0.85%), with a maximum increase of 11.16% (in the case of swine fever) and a minimum of -9.70% (typical of coronavirus). In the following months, from the third to one year, the average was always positive, respectively +3.06%, +5.67% and 12.21%.
In this case the statistic warns us that the current weakness may be momentary, but as we have understood in the past, the market is ready to surprise us in the most unexpected moments.