Why the coronavirus is still affecting share markets

The coronavirus is still affecting the share market. Overnight the S&P 500 (INX) dropped 2% on infection worries.

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The coronavirus is still affecting share markets. Overnight the S&P 500 (INX) fell by 2% on infection worries.

It isn't as though the infection numbers are still growing exponentially in the US in terms of the total number. New York is certainly over the worst of it, it was perhaps the main entry port of the virus into the US. But now it's spreading across the country, so whilst the daily number is staying between 20,000 to 30,000 it's decreasing in the original states and growing elsewhere.

Some in the US are keen to lift restrictions and get the economy going again. Overnight there was a particular warning that spooked US investors.

Dr Fauci, the boss of the National Institute of Allergy and Infectious Diseases, warned if restrictions are lifted too soon it could mean "suffering and death". According to media reports, he said:

"It would almost turn the clock back rather than going forward. There is a real risk that you will trigger an outbreak that you may not be able to control, which in fact, paradoxically, will set you back, not only leading to some suffering and death that could be avoided but could even set you back on the road to get economic recovery."

That's the real danger. A second (and a third and so on) wave. The US hasn't even gotten over the first wave yet. Will the US go into lockdown again? Will it just spread through the country relatively uncontrolled and cause the public's confidence to spend to stay low?

It's a tough situation in the US with different groups having different views.

How does the coronavirus affect the ASX share market?

Thankfully Australia's infection numbers are incredibly low compared to many other countries. But our share market generally follows the US share market on a day to day basis. Some of the ASX's biggest companies like CSL Limited (ASX: CSL) earn a large portion of earnings in the US.

If the US economy goes into lockdown again then it could cause much more economic damage. Not many households or businesses have many months of cash on hand. 

But it won't be like this forever, the world will get through the coronavirus whether it disappears naturally or a treatment can be developed.

I'm going to keep investing during this period of volatility. Over the longer-term, things are more likely to work out than not.

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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