A decision to declare an international public health emergency by the World Health Organization (WHO) this morning is widely expected as the number of confirmed novel coronavirus cases and death toll continue to rise in China.
However, WHO’s statement serves to soothe market jitters as it ‘opposes any restriction on travel and trade against China’. The chairman of WHO praised Chinese efforts to control the epidemic as ‘very impressive’.
US equity indices rebounded in the last hours of trading, lifted by financials (+1.25%), consumer staples (+1.05%), utilities (+0.89%) and information technology (+0.88%), whereas communication (-0.79%), healthcare (-0.78%), materials (-0.59%) were among the worst performing in S&P 500 sectors.
Tesla’s share price jumped over 10% to US$ 640.8 as its latest earnings smashed market consensus. The EPS came in at US$ 2.14, comparing to US$ 1.72 forecast. The company aims to produce at least half a million vehicles this year, which is 36% higher than last year’s output. The coronavirus outbreak in China, however, may put some uncertainty over its production in Shanghai and demand outlook in the first quarter of this year.
Today, traders will eye China’s official manufacturing PMI reading released at 9:00am for clues of economic stabilization. Global cyclical upswing was observed in manufacturing PMI data in the past few months. How strong is this recovery against an abrupt outbreak of health crisis in Asia-Pacific remains to be seen.
The ramifications of the coronavirus go beyond the many people who are infected and under treatment. There are also indirect impacts of the decisions that many millions of individuals make to minimize the chance of getting infected. These include reduced frequency of travel, shopping, dining, entertainment and investment, which may cause heavy losses to businesses who are associated with these affected industries.
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Margaret Yang Yan