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Coronavirus pandemic
Opinion
Nicholas Spiro
Nicholas Spiro

Macroscope | As the coronavirus crisis ravages the US, what accounts for its stock market outperforming the rest of the world?

  • The US stock market is dominated by tech firms that have benefited from trends such as remote working and online shopping
  • Meanwhile, the economic prospects for other regions are even worse

Reading Time:4 minutes
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People walk past The Fearless Girl statue outside the New York Stock Exchange on April 20. The S&P 500 is down 12 per cent this year, compared to a 20 per cent drop in the the MSCI All Countries World ex US index. Photo: AFP
Nicholas Spiro

It is the shocking statistic that has come to define the mishandling of the Covid-19 crisis.

The number of fatalities in the US attributed to the coronavirus has exceeded 73,000, accounting for 28 per cent of the global death toll. The human cost of the pandemic in the US now exceeds the total number of Americans who died in the Vietnam, Iraq and Afghanistan wars and the September 11 terrorist attacks combined.

While the US is by no means alone in having underestimated the threat posed by the virus, President Donald Trump’s administration’s woeful response to the crisis – a toxic blend of denial, belated and half-hearted measures and a willingness to politicise the crisis by stoking anti-lockdown sentiment and blaming China for the spread of the disease – has cost America dearly.
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In economic terms, the US has not suffered a shock on this scale – and at this speed – since the Great Depression. Last quarter, the economy shrank at its fastest pace since the 2008 financial crisis even though the lockdowns across the country were only imposed in mid-March. This quarter, output will contract by nearly 40 per cent year on year, according to the Congressional Budget Office, and is not expected to return to its pre-pandemic level until 2022 at the earliest.

In a sign of the extent to which Covid-19 has ravaged America’s once-buoyant labour market, the publication on Friday of the Labour Department’s employment report is expected to show that payrolls plunged an eye-popping 21 million last month. This would wipe out almost all of the jobs that were created in the last decade.

02:42

Yet, despite the devastation wrought by the pandemic, America’s stock market continues to outperform the rest of the world.

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