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CORONAVIRUS UPDATES:
Chinese President Xi Jinping has warned the novel coronavirus is the worst public health crisis facing the country since its founding, as new outbreaks continued to expand in South Korea and Italy, raising fears of a global pandemic.
The National People's Congress's Standing Committed voted to delay the full session of the (NPC), the country's rubber-stamp parliament, which had been scheduled to start on March 5. No new date has been announced.
As of Monday, there were at least 77,150 confirmed cases in mainland China, bringing the global total to
more than 79,000, with the death toll at 2,620.
- The novel coronavirus COVID-19 is affecting 37 countries and territories around the world and 1 international conveyance (the "Diamond Princess" cruise ship harbored in Yokohama, Japan).
- Global stock markets dipped Monday morning as the coronavirus outbreak continued to grow outside of China, with new cases reported in Europe and the Middle East. The death count continues to rise: At least 2,600 people have died since the start of the outbreak.
But Americans appear to be losing interest, at least as measured by Google Trends data. Searches related to coronavirus have been declining in the US since the end of January.
The decline in interest could be because the outbreak appears to be stabilizing within China — the World Health Organization said on Monday that the epidemic peaked and plateaued there between January 23 and February 2. Similarly, a recent study of more than 72,000 coronavirus patients in China found that the largest number of patients were showing symptoms on February 1.
But the virus' international spread may be getting worse.
Coronavirus cases have been reported in 34 other countries, and 33 people have died internationally. South Korea has been hardest hit — the WHO confirmed 602 coronavirus cases and five deaths there on Sunday.
Italy has at least 229 reported cases and seven deaths. It's unclear how some of those patients became ill. On Monday, a dozen towns in Italy were placed on lockdown.
In Iran, meanwhile, the coronavirus outbreak has forced schools to close. Officials initiated a campaign to disinfect public places after 61 people got sick and 12 died.
Goldman cuts US first-quarter GDP forecast
Goldman Sachs lowered its U.S. growth outlook for the first quarter as the domestic economy takes a hit from the global outbreak. The bank slashed its U.S. GDP growth forecast to just 1.2% from 1.4%, seeing a more severe drag from the epidemic. That growth rate is drastically slower than the 2.1% increase in the fourth quarter and 2.3% for the full year 2019. “The risks are clearly skewed to the downside until the outbreak is contained,” Jan Hatzius, Goldman’s chief U.S. economist, said in a note on Monday. “An increasing amount of companies [are] suggesting potential production cuts should supply chain disruptions persist into Q2 or later.”
ING expects fall in tourism to cost Asia up to $115 billion in 2020
China’s fast-spreading coronavirus could see Asia lose more than $100 billion in tourism receipts, ING said in a research note published Monday.
Robert Carnell, chief economist and head of research for Asia-Pacific at ING, said the Dutch financial group had assumed zero tourism receipts from Asian tourists visiting China and Chinese tourists flying to Asia.
This is a “gross simplification,” Carnell said, but it fits a scenario where the outbreak lingers long after it peaks.
“Official travel restrictions may be slow to be removed, and travellers may remain wary long after it is safe for them to travel again,” he said.
Tourism revenue contributed around 11% of China’s GDP in 2018, according to Trading Economics.
Outbreak may worsen due to quality of health care
The coronavirus’ spread into additional countries is concerning because not every nation is well-equipped to treat it, public health expert Leana Wen told CNBC on Monday. “We are now also seeing countries that don’t have well-developed health care systems, and I’m very worried about what happens when this outbreak hits those countries,” said Wen, a visiting professor at George Washington University’s School of Public Health. The former health commissioner of Baltimore, Wen said weak government institutions, and a lack of public trust in them, could “make the outbreak much more difficult to contain.”
United Airlines withdraws 2020 forecast on coronavirus uncertainty
United Airlines withdrew its full-year 2020 forecast citing the impact of the outbreak and said it was seeing a roughly 100% decline in near-term demand to China. As a result of the outbreak, the company said it has suspended flights between the United States and Beijing, Chengdu, Shanghai and Hong Kong through April 24. “Due to the heightened uncertainty surrounding this outbreak, its duration, its impact on overall demand for air travel and the possibility the outbreak spreads to other regions, the Company is withdrawing all full-year 2020 guidance issued on January 21, 2020,” United said in a regulatory filing.
White House planning to ask Congress for emergency funds to fight coronavirus spread
The White House is planning to ask Congress to approve an emergency spending package to help the Trump administration battle the spread of the coronavirus, a source familiar with the situation told CNBC, adding that the proposed spending deal could be sent to Congress as soon as this week. The Washington Post first reported the White House’s preparations.
The U.S. and South Korean military are considering scaling back command post training due to heightened concerns about the coronavirus, the defense ministers of both countries said on Monday.
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Virus-driven risk-off move lifts yen versus dollar
The Japanese yen rose versus the U.S. dollar on Monday in a risk-off move spurred by the rise in coronavirus cases.
The safe-haven yen was last up 0.73% at 110.74 per dollar, having strengthened to 110.34 earlier in the day.
The dollar index, which weighs the greenback against a basket of six peers, can also function as a safe-haven trade. But it was in negative territory for the day, likely because of a significant move lower in U.S. equities. It was last down 0.095% at 99.33 per dollar.
With coronavirus cases rising in Italy and several Middle Eastern countries dealing with their first infections, fears of a global pandemic sent markets into a tailspin, even as China eased curbs with no new cases reported in Beijing and other cities.
U.S. economic data last week came in below expectations. Money markets are now pricing in a Federal Reserve interest rate cut of 25 basis points in June.
Futures for the Federal Reserve funds rate <0#FF:> have surged in the last few days to price in a better-than-even chance of a quarter-point rate cut in April. In all, they imply more than 50 basis points of reductions by year end.
Central banks across Asia have already been easing policy, while governments have promised large injections of fiscal stimulus, something western countries might have to consider.
· In the earlier days after the outbreak, many economists had predicted a V-shaped recovery, which describes downturns that see a steep fall before recovering sharply. However, traders are loading up on traditional safe havens such as U.S. Treasurys and gold.
The benchmark 10-year note yield fell to 1.369% on Monday, putting the key rate close to it all-time low closing around 1.36%. Yields move inversely to prices. Gold futures jumped 1.7% to around $1,676.60 per ounce and hit its highest level since January 2013.
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Fed's Mester sees U.S. economy performing well, coronavirus a 'big risk'
The U.S. economy should continue to perform well this year and monetary policy is currently well positioned despite the risk posed by the coronavirus outbreak, Cleveland Fed President Loretta Mester said on Monday, as Wall Street stocks tumbled on worries the spread of the virus to multiple countries outside China could pose an escalating threat to global growth.
“The economy has been performing well and I expect that to continue,” Mester said in remarks to the National Association for Business Economics conference in Washington.
She did, however, note that she has incorporated the potential impact of the coronavirus as a downside risk to her forecast this year, which is for U.S. economic growth around 2%, solid job market gains and low and stable inflation.
“At this point, it is difficult to assess the magnitude of the economic effects, but this new source of uncertainty is something I will be carefully monitoring,” said Mester, who called the outbreak a “big risk”
Oil sinks 4% on demand concerns as coronavirus spreads
Oil prices slumped by nearly 4% on Monday as the rapid spread of the coronavirus in countries outside China added to investor concerns over the effect on demand for crude.
Global equities also extended losses as worries about the impact of the virus grew, with the number of cases jumping in Iran, Italy and South Korea.
Brent crude LCOc1 futures fell $2.20, or 3.8%, to settle at $56.30 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $1.95, or 3.7%, to settle at $51.43 a barrel.
Reference: CNBC, Reuters, Business Insider, CNN, Worldometers
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