The World Health Organization said it is confident China will contain the deadly coronavirus, but data out of Hong Kong suggests otherwise.
Dow Jones Industrial Average (DJIA) futures rebounded 85 points in early trading Tuesday. It’s a welcome respite after Monday’s brutal selling which saw the Dow Jones chalk up its biggest loss since October.
The rebound comes off the back of positive comments by the World Health Organization (WHO) which sought to downplay Coronavirus fears. A statement issued by the Chinese foreign ministry said WHO director Tedros Adhanom urged calm.
[Tedros] said the WHO is confident in China’s ability to prevent and control the epidemic… Tedros said the WHO does not advocate for countries to evacuate their citizens from China, adding there was no need to overreact.
While the comments soothed investor fears of a global epidemic, the scientific data paints a different picture. Virologists in Hong Kong this morning said the coronavirus could infect 150,000 people per day if it continues unabated.
Dow Jones futures contracts enjoyed a strong boost overnight, settling 85 points higher as of 5.58 am ET.
According to the WHO, the coronavirus is not yet an “international emergency.” An independent panel has twice voted against the declaration.
The virus has now killed more than 100 in China and infected more than 4,500 globally. Some countries, including the U.S. are preparing to evacuate its citizens from Wuhan, where the virus was thought to have originated.
The WHO has advised against this measure, saying that China has it under control.
The WHO statement is somewhat controversial given scientific data out of Hong Kong this morning.
“We have to be prepared that this particular epidemic may be about to become a global epidemic” – Gabriel Leung, Lead Researcher, Hong Kong University Faculty of Medicine.
The researchers ran a model simulation that revealed the coronavirus could infect 150,000 people per day at its peak. Virologists say the latest outbreak may be ten times worse than the 2003 SARS virus because it is infectious during the incubation period, where patients show no symptoms. The spread of the virus appears to parabolic in nature.
With five cases in the U.S. and the first confirmed human-to-human contagion outside of China, the coronavirus risks becoming a global problem.
Citigroup weighed in on the the outbreak’s effect on the stock market this morning. Analysts said the coronavirus will impact the markets for another month or more.
We believe the market is right to be fearful of the potential scale of the economic cost at this point in time… Indeed, Chinese demand is set to remain extremely weak for 4-6 weeks.
Only a significant development will reverse the Dow Jones downtrend. For example, if China can contain the virus or a vaccine is discovered.
Any news of a vaccine or that patients are responding to medicinal treatment, or that containment is working, would be bullish catalysts.
Until then, the global stock markets remain in cautious risk-off mode.
This article was edited by Samburaj Das.