Jan 31, 2020 - Economy & Business

Investors get bullish after WHO lauds China's coronavirus response

WHO director-general Tedros Adhanom Ghebreyesus during a press briefing on the evolution of new coronavirus epidemic. Photo: Fabrice Coffrini/AFP via Getty Images

U.S. stocks ended the day higher on Thursday after the World Health Organization declared the coronavirus outbreak that has spread to at least 19 countries, killing more than 200 people and infecting nearly 10,000, more a global emergency.

What it means: The declaration was taken as good news by bullish investors because the international organization said China's "unprecedented response" and international cooperation would "reverse the tide" and contain the outbreak.

  • WHO director-general Tedros Adhanom Ghebreyesus lauded the "extraordinary measures [China] has taken" in a press conference Thursday.
  • He added that there was "no reason for measures that affect international travel and trade," sparking hope that airlines could soon restart routes to China and businesses might get the green light to open their doors.
  • China's stock markets have been closed for the Lunar New Year holiday and are scheduled to open on Feb. 3.

Why it matters: The risk that the outbreak could cause further disruptions to business and drastically reduce aggregate demand from China was the outbreak's biggest risk, from a business perspective.

  • That would damage not just China's economy, but — as the world's top trading nation — it would have a major negative impact on trading partners like Japan, Germany, Australia and Brazil.
  • “Declaration of an international emergency will undoubtedly sharpen governments’ focus on protecting citizens,” Jeremy Farrar, head of the Wellcome Trust, a U.K. charity that funds biomedical and public health research, said in a statement.

What they're saying: "Some shorts covered after the director gave the WHO’s stamp of approval to China’s aggressive containment effort," Stephen Innes, Asia Pacific market strategist at AxiCorp, told Reuters.

  • "For now, the market’s risk lights have shifted from flickering on red to a steady shade of amber, which could bring more risk back into play."

Yes, but: Other assets, like commodities and U.S. Treasuries, suggest the coronavirus fears are far from over.

What's next: The U.S. State Department raised its travel advisory for China to Level 4, telling Americans, "Do not travel to China."

  • "Those currently in China should consider departing using commercial means," it added in a statement.

The last word: With most headline-grabbing companies having now reported earnings, the market will likely go back to focusing on economic reports next week.

Go deeper:

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WHO declares deadly coronavirus outbreak a global health emergency

WHO Director-General Tedros Adhanom Ghebreyesus. Photo: Naohiko Hatta - Pool/Getty Images

The World Health Organization declared the fast-spreading strain of coronavirus a public health emergency of international concern, WHO Director-General Tedros Adhanom Ghebreyesus announced Thursday.

Why it matters: Ghebreyesus said the organization made the declaration not because of the outbreak in China, but out of fear it could spread to countries that do not have the capacity to contain it. The threat is WHO’s highest alert level.

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U.S. issues "do not travel" advisory for China

Hong Kong on Jan. 30. Photo: Yat Kai Yeung/NurPhoto via Getty Images

The State Department advised Americans not to travel to China on Thursday and recommended that those currently in the country consider leaving, following WHO's global public health emergency declaration.

Why it matters: The U.S. now considers travel to China as dangerous as going to North Korea, Afghanistan, Iraq, Syria and Somalia because of the coronavirus.

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Coronavirus threat grows, threatening some drug supplies

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens.

As the novel coronavirus continues spreading globally and China grapples with a limited production capability, there's a growing risk to about 150 prescription drugs in the U.S., sources tell Axios.

The big picture: The coronavirus has spread to more countries, with both South Korea and Italy stepping up emergency measures amid rising case numbers on Sunday. COVID-19 has killed at least 2,467 people and infected almost 79,000 others, mostly in mainland China.

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