Stocks, crude oil and high-yield bonds were clobbered in January as investors ramped up demand for investment-grade bonds and gold. Driving the risk-off sentiment in the latter half of last month: rising concern that the coronavirus that’s spreading in China and beyond will take a bit out of the global economy.

Foreign inflation-linked bonds posted the strongest gain for the major asset classes in January. FTSE World Inflation-Linked Securities Index ex-US rose 2.3% last month. US inflation-linked Treasuries were a close second-place performer, posting a 2.1% gain via Bloomberg Treasury TIPS Index.

Broadly defined commodities tumbled the most, mostly due to the slumping prices for crude oil. The Bloomberg Commodity Index fell 7.4% in January in total return terms – the benchmark’s deepest monthly loss in nearly five years. By contrast, spot gold’s price surged 4.7% in January as investors turned to a traditional safe haven during a rocky start to the new year.

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Despite the latest setback, the trailing one-year window still reflects gains for all the major asset classes except broadly defined commodities. The strongest one-year return at January’s close: US stocks via Russell 3000 Index, which posted a 20.5% total return vs. the year-ago level.

But with the coronavirus roiling global economic sentiment, investors are bracing for a rough February.  “This could potentially disrupt global supply chains,” advises Rohini Malkani, an economist at DBRS Morningstar, a global credit ratings consultancy. “It’s too early to say how long it is going to last.”

What is clear is that China’s role in the global economy is substantial and the stakes are relatively high. “China today accounts for about one-third of global economic growth, a larger share of global growth than from the US, Europe and Japan combined,” Andy Rothman of Matthews Asia, an investment manager, said in Congressional testimony last month.

The losses in stock markets around the world last month weighed on the Global Markets Index (GMI). This unmanaged benchmark that holds all the major asset classes (except cash) in market-value weights slipped 0.2% in January–the first monthly loss for GMI since August.

For the trailing one-year period, however, GMI is still holding on to a solid run, posting a 14.1% total return over the past 12 months—midway between the one-year gain for US stocks and US bonds, based on the Russell 3000 Index (+20.5%), and US investment-grade bonds via Bloomberg Aggregate Bond Index (+9.7%).

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