Dow Jones futures fell overnight as Asian stock markets came under pressure from the latest Wuhan coronavirus figures out of China.
Now at 7,711 cases, with 170 deaths, it’s quite clear the virus is moving faster than SARS. The World Health Organization (WHO) may need to reconsider whether to declare an international emergency.
After a mixed Wednesday session for the U.S. stock market, the Nikkei 225 fell more than 1% early Thursday as the number of confirmed coronavirus cases in China continues to soar. Dow futures were off 0.5%, while S&P 500 futures dropped a similar amount. Crude oil declined around 1%, while safe-haven gold spiked 0.5%.
In stark contrast to the calm during the North American session, the juxtaposition with Asian markets on the front lines of the crisis is clear. The Federal Reserve’s decision to extend its repo actions through April helped to maintain confidence in the Dow Jones, though stocks slipped into the close of trade as the WHO committee was reassembled.
Japan is now squarely in focus as the country confirmed its first coronovirus case. It’s also receiving three additional cases among people evacuated from China’s Wuhan region where the virus originated.
Investors have been carefully comparing the development of the Wuhan coronavirus to the SARS outbreak of 2003, and had been heartened by the limited long-term economic impact that the epidemic had on the U.S.
Unfortunately, it’s becoming increasingly apparent that this coronavirus is spreading at an exponential rate that – one that has already eclipsed the prior outbreak.
Confirming these fears, Dr. Tedros Adhanom Ghebreyesus decided to reconvene the WHO committee to reassess its earlier decision not to call the epidemic an international crisis.
Given that the Dow was supported by his previous decision, this clearly leaves those gains hanging in the balance. It seems that precisely the scenario that CNBC’s Jim Cramer warned against at the start of the week could be coming to fruition.
Dr. Mike Ryan, Executive Director of the WHO’s Health Emergencies Programme, believes that the current situation remains live, suggesting that the nature of the crisis is hanging in the balance. He was quoted saying,
We are at an important juncture in this event [new coronavirus outbreak]. We, as [The World Health Organization] believe that these chains of transmission can still be interrupted.
This statement leaves quite a binary outcome for the Dow, as Dr. Ryan is clearly of the view that China either gets on top of the outbreak, or the potential for further exponential transmissions will soar.
The lack of containment in the crisis is undoubtedly spooking global stocks, raising the probability of weakness at the open of trade for the Dow Jones on Thursday.
Disclaimer: The above should not be considered trading advice from CCN.com.
This article was edited by Sam Bourgi, Samburaj Das for CCN.com. If you see a breach of our Code of Ethics or Rights and Duties of the Editor, or find a factual, spelling, or grammar error, please contact us and we will look at it as soon as possible.
Last modified: June 28, 2020 10:46 PM UTC