Just as global markets began to stabilize following the “phase 1” trade deal between the United States and China, things have taken a sharp turn to the downside thanks to the rising death toll of the coronavirus in China. All three Wall Street benchmarks closed sharply lower on Monday, marking the second consecutive session of losses, despite what was expected to be a positive earnings season that was going to send markets higher. The NASDAQ suffered the steepest losses, falling 1.89 percent on the day, while the Dow Jones Industrial Average and the S&P 500 both ended down 1.57 percent. Analysts are now looking at big-name stocks that have high exposure in China, such as Starbucks, Nike, Marriott, and McDonald’s, and are concerned about how closures will impact the brands. Casino stocks have already slumped considerably since last week thanks to their high exposure to the island of Macao, where much of their revenue comes from. Disney Shanghai has suspended operations until further notice and both Starbucks and McDonald’s have shuttered some stores to avoid spreading the virus, moves which may ijmpact their Q1 sales if they are extended for a lengthy period of time.
In Asia on Tuesday, benchmarks continued to sink, with the Shenzhen Composite down 3.45 percent as of 2:09 p.m. HK/SIN and the Shanghai Composite down 2.75 percent after both fell equally steeply on Monday. Even Australia’s ASX 200 which managed to buck the trend on Monday fell more than 1 percent on Tuesday.
Gold futures continued their climb higher as traders continued to search for safe-haven assets.
On the currency markets, the dollar was mixed against its primary trading partners, trading up 0.12 percent against the yen to 109.02, and also gaining against the British pound to trade at $1.305. The greenback eased against the euro as the common currency gained 0.06 percent to trade at $1.1023.
According to CNBC, 4,515 people have been infected with the coronavirus thus far, and 106 people have died. Chinese Lunar New Year events in Beijing have been cancelled, and travel has been restricted for millions of people in mainland China. On Monday, the first case was reported in Germany, Sri Lanka, and Cambodia. Five cases have been reported so far in the U.S. The incubation period for the virus is between two and 14 days, and researchers suggest that patients may be contagious before showing signs of the disease, a possibility that can help the virus spread more quickly. At this point, it is estimated that 1.5 to 3 people who are exposed to each infected person will catch the virus.