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China’s Financial Markets Set for Tumultuous Return on Monday

  • Traders’ first chance since Jan. 23 to react to virus outbreak
  • Global markets have been roiled since China last traded
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How badly will the coronavirus outbreak hurt China’s economy?Markets: Asia.” (Source: Bloomberg)
Updated on

Every other market has already reacted to the deadly virus threatening China’s economy. Soon it will be China’s turn, and it’s likely to be brutal.

Stocks and commodities will almost certainly sink when financial markets reopen Monday for the first time since Jan. 23, while bond yields will drop. For equities, the declines are likely to be exacerbated by the amount of leverage in the market -- near the highest in 11 months. That could create a downward spiral where steep losses become steeper as traders face margin calls.