Five years have passed since the world experienced firsthand — not just through textbooks — what a pandemic is and how profoundly it can impact everyone, even those who never contracted the virus.
This includes restrictions on movement, worsening economic conditions, rising unemployment, and supply chain disruptions that later drove up prices and forced central banks to act.
Enough time has passed, but countries, particularly China, are still grappling with the aftermath of the 2020 epidemiological crisis. If something similar happened again, the impact could be even more disruptive.
This is why the media tends to panic whenever there’s a spike in cases anywhere in the world, especially in China. It doesn’t seem to matter how real the threat is as long as it keeps the readership engaged.
Take the recent outbreak of human metapneumovirus (HMPV) in China. The good news is that this disease is not new, and the population already has some immunity. So, it’s not a Covid 2.0.
Meanwhile, the U.S. has its health issues. The Louisiana Department of Health recently reported the first human death from the H5N1 bird flu. The only thing missing now is a new monkeypox outbreak.
What about the markets?
In the case of China, indices have started the year down, not because investors are worried about new shutdowns but because of geopolitical risks, new sanctions, and the inability to boost consumer demand.
Even the fact that Chinese stock exchanges asked large investment funds to limit their stock sales at the beginning of the year has not helped. Overall, even without a pandemic, China faces numerous challenges.
As for the U.S., the S&P 500 also dipped into the red on Tuesday, but not because of fears over a worsening global health situation. Instead, Nvidia, the market's recent growth driver, took the spotlight.
After the NVDA stock hit a record high of $153 following the unveiling of new systems for humanoid robots and AI agents, profit-taking began, leading to a correction of around 6%.
The good news is that this appears to be short-term speculation. Unless the company decides that AI investments may not pay off and cut costs in the long term, Nvidia still has potential.
The November JOLTS Job Openings report added fuel to the fire, showing new job openings surpassed expectations (8.098 million vs. 7.839 million). This suggests the Fed may not rush to cut rates.
In short, markets don’t seem to be gearing up for another pandemic of COVID's scale. But, as we've learned in the past few years, the unexpected is always possible, and things could take a different turn.
That said, it might be a smart move to add pharma stocks to your watchlist.