Time to tiptoe: Global markets proceeding with caution

Alpha.com and Bloomberg are reporting today that global markets are treading cautiously after 97 people died from the coronavirus in China on Sunday.

People wearing masks walk at Hong Kong Station at Central district of Hong Kong, China, on Wednesday, January 29, 2020.

Market movements that reflected this caution included Japan’s Nikkei and Hong Kong’s Hang Seng Index both fell 0.6 per cent on the day, while the Shanghai Composite Index rose 0.5 per cent.

Guarded optimism is based on the fact that some Chinese companies have been given government approval to resume some production at certain locations.

However, caution was also reflected for European stocks, with the Stoxx 600 Index slipping 0.3 per cent. Alpha said US stock futures are flat heading into the new week.

Japan’s Hong Kong’s Nikkei and Hong Kong’s Hang Seng Index both fell 0.6 per cent.

Bloomberg reported that US equity futures fluctuated on Monday while European stocks edged lower and Asian shares declined.

The response is attributed to investors struggling to determine the consequences of the spreading coronavirus. Treasuries and European bonds turned higher also on this sentiment.

As at Monday morning, February 10, the total number of confirmed coronavirus 2019-nCoV cases across the world was 40,561 and 910 deaths have been reported.

aAnother 60 people on Carnival Corporation’s Diamond Princess ship have tested positive for the coronavirus.

Japan’s Health Ministry says another 60 people on Carnival Corporation’s (NYSE:CCL) Diamond Princess ship have tested positive to bring the total number of people infected to 130.

Alpha said economists expect that the coronavirus will cost the world economy US$280B in Q1 and send global GDP in reverse.

Meanwhile, the news source notes the continued actions by the People’s Bank of China is busy taking action to prop up the economy, injecting 1.7 trillion yuan of liquidity into the market and instructing banks not to call in loans for companies based in the virus-stricken Hubei province.

Inflation in China has spiked to 5.4 per cent in January, up from 4.5 per cent pace in December.

The People’s Bank of China injected 1.7 trillion yuan of liquidity into the market.

Food prices have increases accompanied by strong demand ahead of the Lunar New Year holiday and soaring pork prices.

Some automakers meanwhile, are continuing production amidst the virus outbreak.

Tesla resumed production at its Shanghai factory today. Alpha reports that Government officials in Shanghai are assisting Tesla in the restart.

 Volkswagon is also opening some plants. Daimler and Ford are also restarting production at certain locations.

Volkswagon will begin reopening some of its plants in China.

However, Toyota Motor and Honda Motor have extended shutdowns in China for the time being.

General Motors indicates that it will restart production on February 15.

Alpha noted that Fiat Chrysler Automobiles is the first automaker to disclose the possibility of multi-week disruptions at European factories due to inadequate parts supplies.