The volatile start to 2020 has continued in February as the ongoing uncertainty around the coronavirus outbreak continues to dominate the news. Despite the uncertainty, equity markets moved higher in mid-February, with indices in the US, New Zealand and Australia making new record highs. However, as concerns around the virus grew, equity prices retreated from their record highs. Meanwhile, a pickup in volatility saw ‘safe-haven’ assets, in particular government bonds, rise.

With news the coronavirus is spreading outside of mainland China, we expect its impact – both social and economic – to dominate the headlines in March, and with this in mind, here’s what ANZ is watching this coming month.

ECONOMIC DATA TO SHED LIGHT ON CORONAVIRUS IMPACT

As the fallout from coronavirus continues, March will see the release of economic data that will begin to shed light on the extent of the economic impact of the virus.

In China, the Caixin manufacturing and services PMI – a closely-observed gauge of manufacturing activity – will shed light on how small businesses are holding up during the period of uncertainty. Elsewhere in China, retail sales data for January and February is likely to show a slowdown in spending as the virus halted the movement of millions of people forcing closures of restaurants, retail stores and other entertainment outlets.

Closer to home, both New Zealand and Australia are heavily reliant on the Chinese economy, meaning economic data will be scrutinised over the coming months as fallout from the coronavirus continues.

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