A sharp increase in China's death toll from the coronavirus broke overnight, hinting at another rough day for the Dow Jones on Tuesday.
After a torrid day for the Dow Jones on Monday, things are looking equally bleak for the the stock market’s open on Tuesday as the spread of coronavirus continued to shake investors.
According to the latest figures from the South China Morning Post, the death toll is now at 106, with 1,400 new cases reported.
Despite the headline, U.S. stock market futures were relatively calm, continuing to track slightly higher in a thin period of trade.
Some of the resilience appears to be coming from the fact that no new coronavirus cases have been reported in the domestic United States, suggesting that for now, the CDC has things under control. This calm did stutter, as the rising global death toll hit mainstream media, erasing a small portion of the gains in Dow futures, though the index remained up around 0.3% in Asian trade.
The same cannot be said in China, where the epidemic has now spread to every single province despite Beijing’s efforts to isolate the break-out as much as it can.
Also overnight, Germany announced its first case of the virus, which won’t help a shaky European stock market. Meanwhile, Japan’s Nikkei 225 was off 1% overnight, as a travel ban for Chinese tour groups is expected to cause havoc in the nation’s most lucrative tourist market.
Even if the United States is not massively impacted by China’s struggles with the coronavirus, the sizable economic synergy with the country makes escaping its adverse effects extremely difficult.
Kathy Lien, managing director at BK Asset Management, believes the “fear trade” may spread, and further liquidation in stocks is likely amid widespread concerns about the virus. She said:
Nothing matters more right now than the Wuhan virus…. Here in the U.S., travel stocks have been hit particularly hard but few asset classes have been spared as investors liquidate in fear of more losses… Today’s decline in U.S. equities was the strongest in 4 months and without a positive turn in China’s health crisis or an attempt by President Trump to drive up stocks through promises of another tax cut or further tariff relief for China, additional losses in currencies and equities are expected.
It’s extremely difficult to see how the rapid spread of the coronavirus, (which has already hit around 50% of the total SARS cases) is not going to be a significant concern for the Dow Jones when it opens on Tuesday. Most of the global stock market indices currently open are already taking a pounding.
Disclaimer: The opinions in this article do not represent investment or trading advice from CCN.com.
This article was edited by Sam Bourgi.
Last modified: January 28, 2020 3:50 AM UTC