Jan 22, 2020

Coronavirus scare could hurt stocks, oil and everything else

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."

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Coronavirus kills 2 Diamond Princess passengers and South Korea sees first death

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. U.S. numbers include Americans extracted from Princess Cruise ship.

Two elderly Diamond Princess passengers have been killed by the novel coronavirus — the first deaths confirmed among the more than 600 infected aboard the cruise ship. South Korea also announced its first death Thursday.

The big picture: COVID-19 has now killed more than 2,100 people and infected over 75,000 others, mostly in mainland China, where the National Health Commission announced 114 new deaths since Wednesday.

Go deeperArrowUpdated 7 hours ago - Health

Oil markets may be overly spooked by coronavirus' energy impact

Two pedestrians in Jiangtan Park on Jan. 27 during the lockdown in Wuhan, China. Photo: Getty Images

Some analysts are beginning to wonder if oil markets are overly spooked by the potential for the coronavirus to dent energy demand as travel and economic activity are crimped.

Why it matters: The human health toll is what matters most, with at least 107 people dead so far. But the coronavirus is also rattling markets, and is arriving when the oil market was already awash in supplies and demand growth was modest.

Go deeperArrowJan 28, 2020

WHO: The coronavirus outbreak is not yet a global emergency

Photo: Anusak Laowilas/NurPhoto via Getty Images

The deadly coronavirus has not yet sufficiently spread internationally to designate the outbreak as a global health emergency, the World Health Organization announced Thursday.

Why it matters: Some say the lack of a declaration of a Public Health Emergency of International Concern (PHEIC) could lessen international focus and funding needed to address a potential threat, but others worry such a declaration could limit the travel and trade important to many people's livelihoods.

Go deeperArrowUpdated Jan 24, 2020 - Health