Dow futures dropped sharply in overnight trading as China reported a shocking 14,840 new cases of coronavirus. A sudden surge in confirmed coronavirus cases sends ...
Dow futures dropped sharply in overnight trading as China reported a shocking 14,840 new cases of coronavirus.
Dow futures sold off sharply on Wednesday evening as a parabolic 14,840 case spike of Wuhan coronavirus in China’s Hubei province shocked financial markets. The sharp rise above 60,000 came as Hubei health officials changed the methodology it uses to diagnose the virus.
The Dow Jones had been rallying amid cues that coronavirus cases have been slowing recently, so it was unsurprising to see a sharp retreat following the latest news. Dow futures dropped around 100 points to 29,400 late Wednesday.
Regarding coronavirus infections, official statistics are now reporting more than 60,000 confirmed cases.
Haven assets caught a bid, as the price of gold jumped, and the Japanese yen surged against the U.S. dollar.
Investors should not be surprised that China’s statistics were woefully under reported, as rumors have been swirling for some time that things were far worse than Beijing claimed.
Regional efforts to maintain calm have been a key priority for the local government, and Hubei officials’ previous methodology of reporting confirmed cases was evidently skewed towards lowering the headline figure.
Dow bulls had some forewarning that the figure was going to be rough, as there was an unusual delay in Hubei’s reporting.
To explain the change in their reporting, Chinese health officials provided the following explanation (English translation) of the new “clinical diagnosis” they are now including in their methodology:
According to the plan, Hubei Province has recently conducted investigations on suspected cases and revised the diagnosis results, and newly diagnosed patients were diagnosed according to the new diagnosis classification. In order to be consistent with the classification of case diagnosis issued by other provinces across the country, starting today, Hubei Province will include the number of clinically diagnosed cases into the number of confirmed cases for publication.
The U.S. CDC has always appeared far more concerned about the Wuhan coronavirus epidemic than the stock market. On Wednesday, a top U.S. health official said it was likely the virus would establish a foothold in the United States, a very striking prediction that now makes much more sense after the latest Hubei figures.
On cue, California announced another case of the virus, taking the nationwide total to 14.
With the Dow Jones, Nasdaq and S&P 500 all closing at record highs Wednesday, frothy valuations increase the risk of a damaging correction. That is, if Wall Street has to rapidly readjust the expected economic impact of the virus.
It will be a long Asian session for Dow futures, with the spillover likely to impact the open of the Dow Jones on Thursday morning.
This article was edited by Sam Bourgi.