People in Shenzhen, China, waiting at a train station on Jan. 22. Photo: Costfoto/Barcroft Media via Getty Images
The U.S. and Hong Kong both announced the first confirmed cases of coronavirus, and China's National Health Commission said the death toll from the virus has risen to nine, with 440 confirmed cases across 13 provinces.
Why it matters: "There's no question that economic activity in Asia will be affected as we head into one of the busiest travel weeks in China," BK Asset Management managing director of FX strategy Kathy Lien wrote in a note to clients late Tuesday.
- With China's Lunar New Year holiday approaching, analysts at Goldman Sachs say that based on the damage from the SARS scare in 2003, a sustained outbreak could cut global GDP by significantly more than the 0.15% drop attributed to that outbreak.
- "If the virus is not contained, the impact on consumer confidence could be significant," Lien said.
The big picture: The coronavirus could negatively impact markets from currencies to oil, as declining air travel and sentiment weaken demand across industries.
- Goldman's commodities research team estimates that under conditions similar to 2003, oil prices could see negative shocks leading to a $3 per barrel decline, "although the initial high uncertainty could lead to a larger sell-off, as was the case in March 2003."
- "These volumes are roughly 1.6x times larger than in 2003 given Asia’s significantly higher contribution to global growth and jet fuel demand."