The China-based virus which is spreading globally despite a better-than-expected response from Beijing has all the hallmarks of a black swan event - the unexpected external issue with extreme consequences for investors that can only be explained later.
On the ASX, traders will be particularly trigger happy knowing we have already had the strongest start to the year among all developed markets, a run-up which prompted New York Investment bank JPMorgan to identity the ASX 200 as the “world’s most expensive market”.
Certainly, the swirl of fear in trading markets on Tuesday spurred by secrecy inside China offers a potential dress rehearsal for how our market might react to any serious slide in global confidence.
As the ASX 200 lost 1.35 per cent on Tuesday to 6994.5 - its worst day so far this year - the Future Fund chairman Peter Costello did little to calm local investors when he put the fears surrounding the virus ahead of climate change risk in order of priority.
For now, at least, the sell-off in Australia is logical and proportionate. What we don’t see yet is indiscriminate selling.
The fall on Tuesday locally was actually a little lighter than the overnight fall on Wall Street, where the Dow Jones Industrial Average lost 1.57 per cent.
Just about all of Tuesday’s worst hit ASX stocks were resources and travel-linked stocks, meanwhile the strongest sector of the day was local gold miners.
A 5 per cent fall at Qantas, 13.8 per cent at Webjet and another 5 per cent peeled off from miserable Crown Resorts should not surprise.
Similarly, Fortescue down 7 per cent and Rio down 3 per cent were both heading for a fall after an exceptional run on the back of higher than expected iron ore prices in recent months.
But the allegedly “safe” infrastructure categorisation Sydney Airport holds did not help the company as it fell by 3 per cent. Similarly, ANZ bank fell 1.7 per cent, more than the wider index despite the bank’s high dividends.
So which stock held up on the worst day for weeks?
The Melbourne-based pathology company CSL edged to a new record high of $319 before settling up 0.6 per cent to $312.66 at the close.
Can anything knock this market leader off its perch? The blood products company which is, after all in the vaccine business, was trading on the market at $275 at the start of the year.
More importantly, it is “growth stocks” where the market has now put its faith.
This recent change of heart will probably explain the sturdy performance from high flyers such as Afterpay which barely moved - dropping just 0.8 per cent over the session.
Indeed technology stalwart Technology One Managed to lift 1.3 per cent.
As volatility indices bounced higher all over developed markets, analysts are divided over whether the coronavirus will spur another full-blown market downturn as the SARS virus did 2004.
As the government mulls evacuating Australian nationals from China, the similarities with that epidemic 15 years ago are surely more relevant than the differences as far as investors are concerned.
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Is this the black swan? As fears swirl over the coronavirus we have a sell-off on hand and if Wall Street does not rebound mid-week we might just see this overheated share market get the “correction” everyone knows is looming.