Shares of industrial and transportation companies fell sharply amid concerns that coronavirus outbreaks around the world would lead to a marked slowdown in trade and economic activity.
In a Sunday statement, the Group of 20 major economies acknowledged that the virus posed a risk to global growth and agreed to take action should the epidemic's impact intensify.
On Monday, Cleveland Federal Reserve President Loretta Mester said the economic ramifications of the outbreak were not yet clear, but warranted close scrutiny.
Among shipping lines dependent on the flow of goods around the world, shares of container-freight line A.P. Moller-Maersk and dry bulk carrier Golden Ocean Group fell sharply.
"What I call the Goldilocks thesis -- 'not too hot, not too cold' -- the main thesis for a lot of investors, is being challenged right now," said Rich Steinberg, chief market strategist at the Colony Group.
Stock-market bulls are betting on "what I would call the v-shaped recovery in China," said Mr. Steinberg. Their thinking is "'this is a human tragedy, but it's transitory like other [disasters]. There will be pent-up demand and shipping will catch up. Even if it falls into the second quarter, especially with the phase one trade deal done, demand will catch up and we'll be full throttle.'"
If China experienced a multi-quarter, "elongated U-shaped" recovery it would have more profound consequences for global economic growth, Mr. Steinberg said, adding that it was too soon to tell which scenario was more likely.
Write to Rob Curran at firstname.lastname@example.org
(END) Dow Jones Newswires
February 24, 2020 16:58 ET (21:58 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.