Christian Gattiker (Julius Baer) | Fears of the health situation in Asia getting out of control skyrocketed over the weekend. Accordingly, concerns of a spillover to the rest of the world increased. As a response, Chinese authorities upped their stakes in the crisis-fighting mode. Day after day, they gave credible signals on several fronts that they are doing their utmost to contain the situation and mitigate the fallout for their own people but also for the world economy. First, the central bank injected liquidity into financial markets, although they could not avoid an initial drop of Chinese risk assets after the prolonged holidays. Then the authorities announced a breakthrough in the research on the coronavirus that should open ways for treatment/vaccination soon.
Finally, they announced a 50% tariff cut on US imports for those grades that were in scope of the recent trade deal. All in all, this was more than enough for fear-stricken stock markets to go into relief mode. Some stock indices actually posted new all-time highs yet again, something that only few investors would have expected only a week ago.
Against this backdrop of concerted action, the news from the US sound far less spectacular: a futile impeachment process finally turned down and a more than 24-hour wait for the Iowa caucus results.