The World Health Organization declared the recently discovered coronavirus a global health emergency on Thursday as the death toll climbed to 213 and cases were reported in at least 18 countries. Nearly 10,000 cases of the virus have been confirmed thus far, with over 12,000 cases suspected in China. The virus has already affected more people than the 2003 SARS epidemic. CNBC reported the first case of human-to-human transfer of the virus on Thursday, increasing concern.
Analysts and traders worldwide have been concerned that the virus, which has already caused headaches for travelers, airlines, hotels, restaurant chains and other industries, could have deleterious impacts on the global economy. Nevertheless, global stock indexes remained largely positive, with all three Wall Street benchmarks closing higher on Thursday, and Asian indexes were also mostly higher on Friday. Japan’s Nikkei 225 jumped 1.13 percent as of 1:58 p.m. HK/SIN, while Australia’s ASX 200 and Hong Kong’s Hang Seng Index were up 0.15 percent and 0.13 percent respectively. South Korea’s Kospi bucked the trend, heading down 0.38 percent.
Save haven assets, rising steadily in recent days, took a breather from their gains on Friday. Gold futures were down 0.787 percent to $1,576.70 per ounce, and silver was down 0.9 percent to $17.83 per barrel. The Japanese yen which also gained considerably in recent sessions, eased against the dollar, down 0.087 percent. The greenback was trading at 109.05 against the yen after falling below the 109 level yesterday.
Reactions to the Virus
Many airlines cancelled some or all of their flights to China earlier this week, and additional airlines reported closures today, including Air France, whose flights are cancelled through February 9, and Luftansa, whose flights are cancelled through the end of February. Swiss airlines and Austrian Airlines also cancelled their flights to China through February. Additional cancellations came from Seoul, Egyptair, Singapore Airlines, American Airlines, Finnair, Delta Airlines, and Turkish Airlines.
The widespread cancellations are expected to have a direct impact on the stock prices of the airlines as well as oil prices, as demand continues to be reduced. Many hotels in China, Hong Kong, and Macao are seeing a dramatic reduction in occupancy, with sources telling us that casinos in Macao are experiencing a 70 percent decline in occupancy. The decline in tourism has already had a direct impact on U.S. hotel stocks, many of which rely on revenue from Asian activity.
The Chinese automobile industry is also bracing for a difficult Q1 as showrooms are expecting buyers to stay home, rather than head out to purchase new cars. Hubei, the province that is the center of the virus outbreak, is responsible for nearly 9 percent of China’s vehicle production and for producing parts for global brands including Honda and Renault. Many factories have been closed due to fears of contagion, with many closed until at least February 10.