Chris Beauchamp is a market analyst at IG, says Yes.
News of a new case of Ebola in the US sparked a modest selloff on Friday, with investors spooked by the fact that the patient had been in contact with other people. With global sentiment still fragile following the recent market correction, it seems likely that a worsening of the Ebola crisis will push markets into panic mode. The key worry will be the potential impact on economic growth. And while some might point to the limited impact of the 2003 Sars outbreak on Asian growth, the knock-on effects from Ebola are likely to be severe, with estimates of around $30bn (£18.65bn) in lost economic growth in Africa alone. Ebola has become one of the key risks worrying investors. Those looking to reduce their holdings of risk assets – such as equities – could be looking to book gains made in the recent bounce-back, prompting another fall in indices that could potentially test the lows witnessed in the selloff we saw a few weeks ago.
Nick Beecroft is senior market analyst at Saxo Capital Markets, says No.
At the risk of tempting fate, due to the difficulty of transmission, I do not expect Ebola to become a major epidemic, nor to impact markets significantly. Nigeria has been able to contain its outbreak, and I expect the US and other developed countries will be able to do so. Unfortunately, we’ll no doubt continue to witness sporadic cases across many countries, but they will be contained. Recent market volatility arose because the sum of all fears just became too much. By themselves, the following might not have been, and indeed hadn’t been, enough: world growth and deflation fears, Eurozone worries, Ukraine, China’s slowdown, clashes between the ECB and German government, and Ebola. Accommodative global monetary policy is still the most important driver of markets – a few soothing words from the Federal Reserve, and stocks turned on a sixpence. But if Ebola transmission becomes airborne, that would be a different matter.