· Coronavirus live updates: China’s death toll rises to 636 as total cases cross 31,000
China says there were an additional 73 deaths and 3,143 new cases of the coronavirus in China as of the end of Feb. 6, the National Health Commission said in its daily update on Friday.
This brings the total number of deaths in China to 636 and the cumulative number of confirmed cases to 31,161, the government said.
Most of those who died on Thursday were from Hubei — the epicenter of the outbreak.
· Hit to global economy will be worse than SARS
The new coronavirus outbreak will be worse for the global economy than the 2003 SARS outbreak, IHS Markit predicts. Though estimates vary, economists say that the SARS outbreak in China cost the global economy about $40 billion. But during that 2003 outbreak, China was just the sixth-largest economy in the world, IHS Markit’s report says, accounting for 4.2% of the global economy. There’s more at stake now. Today, China is the second-largest economy, making up 16.3% of the world’s GDP.
· Yen, Swiss franc fall for 4th day as investors stay risk-tolerant
The safe-haven yen and Swiss franc struggled for a fourth straight session against the U.S. dollar on Thursday, as investors’ tolerance for risk increased, encouraged by the Chinese government’s efforts to contain the latest coronavirus and limit the economic fallout.
The Japanese currency dropped to a two-week low versus the dollar, while the franc fell to its weakest level in more than a week. Investors also cheered news that China would cut in half the additional tariffs imposed on1,717 U.S. goods last year, following the signing of a Phase 1 trade deal.
In midmorning trading, the dollar rose 0.1% against the yen to 109.92, and slid 0.2% versus the franc to 0.9754 The euro, meanwhile, tumbled to a two-month low against the dollar, weighed down by data showing German industrial orders unexpectedly plunged in December.
That suggested that the euro zone economy would remain sluggish in the opening months of 2020. Contracts for German goods fell 2.1% in December from November, the biggest drop since February. A Reuters poll had forecast a 0.6% rise.
The euro’s losses pushed the dollar index up 0.1% to 98.432, which benefited as well from Thursday’s solid U.S. economic data. The number of Americans filing for unemployment benefits dropped to a nine-month low last week, falling to 202,000 for the week ended Feb. 1. A separate report showed nonfarm productivity, which measures hourly output per worker, increased at a 1.4% annualized rate last quarter.
“The overall narrative for the U.S. economy is that it’s still in a very strong position compared to other developed markets,” said Monex’s Harvey. The offshore Chinese yuan, meanwhile, was little changed against the greenback, trading at 6.9770 yuan per dollar, after weakening to 7 per dollar on Monday. Broader market volatility fell to new lows, with one-month implied euro-dollar price swings dropping to a record low of 3.7% this week.
· US weekly jobless claims drop to a 9-month low
The number of Americans filing for unemployment benefits dropped to a nine-month low last week, suggesting a tightening labor market would continue to support the economy this year.
Initial claims for state unemployment benefits decreased 15,000 to a seasonally adjusted 202,000 for the week ended Feb. 1, the lowest reading since last April, the Labor Department said on Thursday. Claims data for the prior week was revised to show 1,000 more applications received than previously reported.
· China to halve tariffs on some U.S. imports as coronavirus risks grow
China on Thursday said it would halve additional tariffs levied against 1,717 U.S. goods last year, following the signing of a Phase 1 deal that defused a bruising trade war between the world’s two largest economies.
China’s finance ministry said in a statement that starting Feb. 14, additional tariffs levied on some goods will be cut to 5% from 10% and others lowered to 2.5% from 5%.
The ministry did not state the value of the goods affected by the decision, but the products affected by the new rule are among $75 billion of goods hit by Chinese tariffs of 5% to 10% tariffs that came into effect on Sept. 1.
In a separate statement, the finance ministry said the tariff reduction corresponds with those announced by the United States on Chinese goods that are also scheduled for Feb. 14.
· EU trade chief Hogan returns to Washington as auto tariffs loom
European Trade Commissioner Phil Hogan returned to Washington on Thursday for talks with U.S. counterpart Robert Lighthizer designed to improve transatlantic ties as the threat of auto tariffs looms.
Hogan first visited the United States as EU trade chief three weeks ago, declaring at the time that the European Union’s bid to reset EU-U.S. economic relations had got off to a good start.
However, U.S. President Donald Trump said after meeting European Commission chief Ursula von der Leyen in Davos a week later that he would impose tariffs on imports of cars from the European Union if no trade deal were struck.
U.S. Treasury Secretary Steven Mnuchin told Fox Business Network that reaching an agreement with the EU on agriculture and other issues was a priority for the Trump administration.
· Six central banks to hold digital currency meeting in April: Nikkei
Leaders of six major central banks undertaking joint research on digital currencies are considering holding their first meeting in mid-April in Washington, the Nikkei newspaper reported on Thursday.
· Japan household spending falls more than expected in December
Japanese household spending fell at a much faster pace than expected in December, sliding for the third straight month in a sign consumers are having a hard time coping with a sales tax hike.
The world’s third-largest economy is struggling to regain momentum after last October’s sales tax hike led consumers to curb spending. China’s coronavirus epidemic poses a new threat to the global growth outlook and Japan’s output and exports.
Household spending slipped 4.8% in December from a year earlier, government data showed on Friday, coming in well below a median forecast for a 1.7% decline.
Following the tax hike to 10% from 8%, the first such rise in four and a half years, it tumbled 5.1% in October, the fastest pace of decline since March 2016, and dropped 2.0% in November.
Japanese policymakers are hoping on a recovery in domestic demand largely fueled by resilience in consumer spending to help soften the blow to businesses’ profits from a delayed pick-up in global growth.
· Oil moves higher as traders eye production cuts
An OPEC+ technical panel has recommended a provisional cut in oil output of 600,000 barrels per day (bpd) in response to the coronavirus’ impact on energy demand as it awaits Russia’s final position on the proposal, three sources said.
The Joint Technical Committee (JTC) is not a decision-making body but does advise the Organization of the Petroleum Exporting Countries and allies led by Russia, a grouping known as OPEC+.
OPEC and its allies led by Russia produce over 40 percent of global oil and the new proposed cut would constitute around 0.6 percent of global supply.
Brent lost 23 cents, or 0.3%, to trade at $55.05 per barrel, while U.S. West Texas Intermediate gained 20 cents, or 0.4%, to settle at $50.95 per barrel.
OPEC+ ministers have not decided on further action, but the recommendation on Thursday by all the members of the JTC, which includes Saudi Arabia and Russia, would signal progress towards a decision.
Reference: CNBC, Reuters
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