Coronavirus Sends Jitters Through Global Markets

Global stock marketsIllness is unpleasant, and often dangerous, and it can cause people, medical professionals, and the World Health Organization to be concerned, for a variety of reasons. But when illness threatens the global stock markets, the world takes notice – and that’s exactly what happened in the Asian markets on Tuesday, when reports of the spreading coronavirus in China spooked traders and sent Asian stock indexes broadly lower. The virus has afflicted some 200 people thus far, resulting in four deaths, and has caused widespread panic in advance of the Chinese New Year celebrations which will be starting later this week, and will increase travel in China and abroad, which will likely help the virus spread.

The virus, also referred to as the Wuhan virus, which is the district it was discovered in, is similar to pneumonia, and health officials say that it began as an animal virus and crossed over to humans in late December. Little else is known about the virus at this time, though cases have been reported as far away as Japan, South Korea, and Thailand.

The virus can, potentially, have severe impacts on the economy, analysts from both CNBC and Reuters suggest, because it can cause people to stop traveling, eating out, shopping, or taking public transportation, as they fear being exposed to the virus. Many analysts recall the 2003 outbreak of SARS with fear and remember that tourism in some regions fell as much as 45 percent year on year.

For now, the Wuhan/coronavirus seems to be less serious than SARS, but traders are still spooked. The Shanghai Composite fell 1.34 percent as of 2:07 p.m. HK/SIN, and the Shenzhen Composite was down 1.19 percent. South Korea’s Kospi eased 0.98 percent, and even Australia’s ASX 200, often immune to such declines due to geographic distance, fell 0.19 percent.

The biggest losses were seen in Hong Kong, where the Hang Seng Index plummeted 2.54 percent, partially on fears of virus contagion, and partially because the Moody’s rating agency downgraded Hong Kong’s credit rating on Monday, cutting it from Aa3 to Aa2. The Fitch ratings agency made a similar move in September, as the region entered a recession for the first time since the 2008 global financial crisis, thanks to ongoing rioting and political unrest.

Other Market Movements

Oil futures were lower on Tuesday after climbing on Monday on concerns that disruptions in Libyan production would tighten the markets. Brent crude futures eased 0.81 percent to $64.67 per barrel, and U.S. WTI futures were down 0.46 percent per barrel to $58.27 per barrel. Still, even a prolonged supply disruption has ceased to worry traders as much, since OPEC’s spare capacity rests above 3 million barrels per day and can easily be used to boost supply if needed.

On the currency markets, the dollar eased against the safe-haven yen, falling below the 110 mark to trade at 109.94, a 0.218 percent decline. The euro was flat against the dollar in a continued period of low volatility, but the British pound managed to squeeze out a 0.04 percent gain against the dollar, to trade at $1.3014.

Sari Holtz

Sari Holtz began working at DailyForex in 2011 when she was hired to provide daily news analysis and to manage the daily content. Since then, she has continued to provide regular news items that focus on how political events impact the global economy. She also works directly with dozens of Forex brokers worldwide to ensure that they get their messages across and that traders can find the best broker for their individual needs.