Asia-Pacific stocks slide after US slumps for sixth day
Asia-Pacific stock markets dropped on Friday following a closing sell-off for US stocks on fears over the impact of coronavirus on the global economy.
Japan’s Topix index was down 2.9 per cent in early morning trading, putting the index on track for its worst week in four years. The Kospi in Seoul fell 1.9 per cent, lining the index up for a 6.8 per cent fall for the week, its worst since 2012 as the number of Covid-19 cases in the country neared 2,000.
Australia’s S&P/ASX 200 was down 3.2 per cent, taking its loss for the week to 9.7 per cent and putting it on track for its worst week since the global financial crisis.
Overnight in the US, the S&P 500 ended down 4.4 per cent, its worst one-day performance since 2011 and taking its decline since a peak last week to 12 per cent. A fall of more than 10 per cent is defined as a correction. The Stoxx 600 of European shares dropped 3.8 per cent and London’s FTSE 100 fell 3.5 per cent.
A sudden, rapid spread of coronavirus in South Korea, Italy and Iran this week has ignited fears of a possible pandemic and a hit to company earnings prompting calls for central banks to lower rates.
“Uncertainty is rife, feeding volatility, but the simple maths as Covid-19’s spread outside China means worsening virus news to come,” ANZ said in a note.
Gold, a haven in times of uncertainty, was up 0.1 per cent higher at $1,643 an ounce. The yield on the 10-year US Treasury was 2 basis points lower at 1.2755 per cent, having touched a record intraday low on Thursday as investors sought the safety of government debt. Yields fall when prices rise.
S&P 500 futures were more steady, up 0.2 per cent
JPMorgan advises against ‘non-essential’ international travel
Laura Noonan reports from New York
JPMorgan Chase is advising staff against all “non-essential” international travel to minimise the chances of contracting the coronavirus.
America’s biggest bank detailed its latest guidance on the coronavirus in a memo to staff on Thursday evening.
A person familiar with the contents of the memo said it “discouraged” international travel, suggesting postponing meetings and using teleconferences as alternatives.
The guidance is not a ban and staff will still be able to undertake necessary trips.
The bank also asked staff to test their remote access in case they have to work from home.
A previous ban on travel to mainland China remains in place. JPMorgan declined to comment.
China reports 44 new coronavirus deaths
Health authorities in China reported 44 new deaths from coronavirus to the end of Thursday, up from 29 a day earlier, and taking the total in the mainland to 2,788.
There were 327 new cases of the virus recorded, against 433 for the previous day, bringing the total to 78,824.
S Korea struggles to find members of religious sect at heart of outbreak
By Edward White and Kang Buseong in Seoul and Kana Inagaki in Tokyo
South Korea reported 256 new cases of coronavirus on Friday morning as officials struggle to locate members of pseudo-Christian sect at the heart of the country’s outbreak.
South Korea, which is the worst country affected outside China, has now recorded 13 deaths and 2,022 confirmed cases, according to the latest data from the Korea Centers for Disease Control.
The South Korean outbreak has centred on Daegu, the country’s fourth-biggest city, where most cases have been linked to the Shincheonji Church of Jesus.
The South Korean government has pledged to test the sect’s 215,000 South Korean members and has received a list of their names in recent days.
However, Park Won-soon, the Seoul mayor, has said that about 1,500 of the group’s members in Seoul have so far not responded to phone calls.
“Shincheonji, with its secretive nature, does not reveal where it is and what it does. This is not different from manslaughter by negligence as transparency is most important in prevention measures,” he said.
The increase in cases on Friday followed a jump of more than 500 confirmed cases on Thursday, as the country’s rate of confirmed infections appeared to outpace that of China.
The South Korean infection rate comes on the back of a sharp increase in testing. Tests have been carried out on nearly 45,000 people and more than 24,000 are being tested.
That compares with neighbouring Japan, where there have been 186 confirmed cases and 2,058 tests carried out, according to the Japanese health ministry.
Virus outbreak could increase refinancing risks in Asia-Pacific – Fitch
The risk of borrowers not being able to refinance will rise in Asia if the coronavirus is not effectively contained, Fitch said on Friday.
The rating agency said that credit ratings would not be significantly affected if the outbreak is contained within the first quarter, but will be “more pronounced” if the epidemic lasts longer.
“The potential inability of Chinese corporates to refinance maturing local and cross-border debt remains a risk, and this risk will escalate the longer the health crisis continues,” Fitch said in a report.
It added that most businesses in China will be affected “to varying degrees”, both in terms of their revenue and ability to refinance, and that an easing of credit policy could “impede or delay government efforts to reduce risks in the financial sector”.
Tokyo Disney Resort to close for two weeks
Oriental Land, which operates Disney resorts in Tokyo, says it will close its parks for two weeks on the back of the coronavirus outbreak.
The virus has already forced the closure of Disneylands in Shanghai and Hong Kong.
The move follows an announcement yesterday that all Japanese schools will close until April 8, in a bid to reduce social contact and limit the virus’ spread.
The reaction to the virus in Japan has been ramped up this week, with prime minister Shinzo Abe calling for the cancellation or delay of professional sports matches and music concerts.
Tokyo is expecting to host the 2020 Olympic Games this summer.
US Navy requires ships to limit port visits in Pacific
Primrose Riordan reports from Hong Kong
The US Navy’s Seventh Fleet has introduced a 14-day break between port visits for its ships within the Pacific Ocean in response to the coronavirus.
The navy was ordered this week to schedule the break when they were travelling between ports in the region as a precaution, but a spokesman for the navy said there were no signs any of their sailors had the virus.
A US Navy spokesman said the Pacific fleet had implemented “additional mitigations” to prevent sailors from contracting Covid-19 and to monitor those who have travelled to “higher-risk areas”. The comments were first reported by CNN.
Japanese consumers panic-buy toilet paper
by Robin Harding and Mitsuko Matsutani in Tokyo
A run on toilet paper has begun in Japan as consumers panic-buy items they fear will be in short supply during a Covid-19 shutdown, in a sign of the growing disruption to daily life from the response to the virus.
Toilet paper was out of stock on Amazon Japan and shoppers shared photographs of empty supermarket shelves on social media as the rush to buy accelerated, even though there is no relationship between toilet paper and the virus.
According to local media, there is a false rumour circulating that toilet paper and face masks use the same raw material, and increased production of face masks will lead to shortages of toilet paper.
At one supermarket in Tokyo’s Nerima ward, the shelves were already empty of toilet and tissue paper when the doors opened. At another, shoppers were being rationed to one package of toilet paper each.
Gauge of business conditions in China hits record low
Hudson Lockett reports from Hong Kong
Business conditions in China have deteriorated sharply, with an independent gauge dropping to a record low as sales and profit forecasts plummet due to the coronavirus outbreak.
An index of business conditions, provided by the Beijing-based Cheung Kong Graduate School of Business, fell from 56.2 in January to 37.3 in February, dropping far below the 50-point line separating growth from contraction in a result that the report’s authors described as “shocking”.
Sub-indices for sales and profit sank to 32.8 and 24.3, respectively. “Both indices have tended to perform relatively well, and have maintained stability,” the authors noted, “but this month the sudden drop shows that our sample companies are in crisis.”
Almost half of the companies surveyed said they had no way to resume work, with 73 per cent blaming either serious quarantine conditions or the difficulty of staff returning to the workplace. Just 11 per cent of companies expected to running at or near full capacity by the end of the month.
“We were psychologically prepared for poor results… but the actual figures are worse than we had imagined,” said Li Wei, a professor at the business school.
Hyundai factory suspends production after worker diagnosed with virus
Edward White and Song Jung-a report from Seoul
Hyundai Motors has suspended production at one of its factories in South Korea after a worker was diagnosed with coronavirus.
The company is now disinfecting the facility in Ulsan, in the country’s south-east, and quarantining co-workers who had contact with the infected employee, a spokesperson said.
The case is the latest disruption to South Korea’s critical export industries and follows a rapid spike in the number of confirmed cases of the virus in South Korea this week.
South Korea, which is the worst country affected outside China, has recorded 13 deaths and 2,022 confirmed cases, according to the latest data from the Korea Centers for Disease Control. That marks an increase from fewer than 50 confirmed just 10 days ago.
On Thursday the country became the first to outpace China in new confirmed cases, after reporting more than 500 new infections.
Earlier this month Hyundai was forced to halt output across all its car factories in South Korea after running out of engine wire-harness components from China. At the time, China was dealing with its country-wide factory shutdowns because of the virus.
Hyundai, combined with its Kia affiliate, is the world’s fifth largest carmaker by sales. Fitch analysts on Friday slashed their forecast for South Korean GDP growth to 1.7 per cent from 2.2 per cent.
New Zealand reports first case of coronavirus
Jamie Smyth reports from Sydney
New Zealand has reported its first case of coronavirus and announced new travel restrictions covering travellers from Iran.
Jacinda Ardern, New Zealand’s prime minister, told reporters on Friday the Pacific nation’s first confirmed case of the coronavirus was diagnosed in a New Zealand resident aged in his 60s, who had travelled to Auckland on Wednesday via flights from Tehran and Bali.
The patient is being treated at Auckland City hospital in isolation and is in a stable condition.
New Zealand today announced new travel restrictions for Iran, which will restrict entry to New Zealand for non-residents. Any New Zealand residents returning to the country from Iran will have to self-isolate for 14 days.
Hong Kong government places dog in quarantine
Primrose Riordan reports from Hong Kong
The Hong Kong government has placed a dog in quarantine after biological samples from the animal tested “weak positive” for the coronavirus.
A spokesman for the agriculture, fisheries and conservation department said the dog did not have any symptoms, and it is unclear whether it is infected. He added that it was the pet of a patient who had the virus, and that it was being kept in isolation for 14 days.
“At present, the AFCD does not have evidence that pet animals can be infected with Covid-19 virus or can be a source of infection to people,” the spokesman said.
Stanford University infectious disease specialist Krutika Kuppalli said on Twitter that people should “not start going into panic mode over this”, while University of Queensland virologist Ian Mackay told the Financial Times it was “extremely unlikely to be a significant route of transmission back to humans”.
Dr Mackay added: “I’d prefer to read a scientific paper that lists all the sample collected and what was tested positive and whether any infectious virus was sought or recovered.”
UAE cancels cycling race after two Italians test positive for coronavirus
Simeon Kerr reports from Dubai
A professional cycling race in the United Arab Emirates was cancelled early on Friday after two Italian staff members on one of the teams tested positive for coronavirus.
The organisers of the UAE Tour, the highest profile race in the Middle East, said all participants and staff would be tested and quarantine measures would be taken “to curb the spread of its outbreak”.
The final two stages of the race in Abu Dhabi were pulled as participants confirmed that they were confined to their hotel in the capital on Yas Island, where they had been based for the week-long tour.
Four-time Tour de France winner Chris Froome said he was in his hotel until further notice, awaiting the results of a test for the virus.
“It’s a shame that the #UAETour has been cancelled but public health must come first,” the British rider tweeted. “I hope those affected make a speedy recovery and there aren’t any further cases.”
The ministry of health on Thursday had reported six new coronavirus cases, bringing the total number of cases in the UAE to 21, including the two Italian professional cyclists.
The six new cases reported on Thursday comprise four Iranians, a Chinese national and a Bahraini national. A total of 28 people who came into close contact with previously reported cases have been screened, the ministry added.
Europe: what you might have missed
The Hong Kong government has quarantined a dog that tested “weak positive” for the virus. The pet, whose owner is infected, will be kept in isolation for 14 days. It is still unclear whether pet animals can be infected or a source of infection, and experts urged caution.
Asian markets sold off for the seventh day in a row, following further declines on Wall Street as traders fretted that the emerging global spread of the virus would weigh on the global economy this year.
New Zealand reported its first case of coronavirus in an elderly citizen who had travelled from Tehran, via Bali. The government announced measures restricting travel into the country from Iran.
Japan is witnessing a run on toilet paper, in a sign that the virus is increasingly disrupting daily life in the Asian country. Yesterday, the government closed all schools until April 8, in a bid to reduce the spread of the coronavirus.
China reported 44 more coronavirus deaths, taking the total on the mainland to 2,788, from 78,824 cases. South Korea, the country with the most cases of infection outside China, has recorded 2,022 cases and 13 deaths.
South Korea sets out emergency $13bn spending plan
Song Jung-a reports from Seoul
South Korea on Friday announced Won16tn ($13.2bn) of emergency financial support to cushion the blow from coronavirus to Asia’s fourth-largest economy as domestic consumption and activity slows amid the fast spread of the virus.
The spending plan is in addition to more than Won4tn that the government has spent or earmarked to boost the economy, as the number of infections in the country on Friday surpassed 2,000, the second highest count in the world outside of China.
About Won2.8tn will be provided in gift vouchers and other financial support for households while Won1.7tn will be offered in tax incentives for landlords who lower the rent for small merchants affected by the virus outbreak, Seoul’s finance ministry said.
It is the latest case of a government offering handouts to its people to minimise the economic fallout from the virus outbreak after Hong Kong announced a similar scheme this week.
“Economic sentiment and activities have been rapidly deteriorating since the number of infections sharply increased last week,” finance minister Hong Nam-ki told a press conference.
Mr Hong added that the government will submit a bill for an extra budget of more than Won6tn next week “to revitalise the economy and overcome the difficulty caused by the outbreak.”
The stimulus measure comes after the Bank of Korea governor Lee Ju-yeol raised the prospect of economic contraction in the first quarter. The BoK slashed its growth forecast for the Korean economy this year to 2.1 per cent on Thursday from the previous 2.3 per cent although it stood pat on interest rates.
Indian stocks fall as coronavirus weighs on global markets
Amy Kazmin reports from New Delhi
The Bombay stock exchange Sensex fell more than 3 per cent in Friday morning trading, as coronavirus fears hit the market.
The plunge, mirroring similar sharp falls elsewhere, came as investors waited the evening release of official GDP data for the October to December quarter.
Even before the coronavirus outbreak began, India was in the grip of a sharp economic slowdown. GDP growth has slowed for six consecutive quarters, sinking to just 4.5 per cent for the three months through September.
Investors believe Friday’s data will show the economy remained flat in the Sept-Dec quarter, and that tentative signs of recovery may take a hit from the impact of coronavirus and lack of economic reforms.
German chemicals group BASF warns of ‘significant impact’
BASF, the world’s biggest chemicals company, has warned that the coronavirus outbreak will have a “significant impact” on its business in the next few months, as the German group reported a 30 per cent drop in pre-tax earnings for 2019, reports Joe Miller in Frankfurt.
“In the first two months of this year, we are already experiencing a high level of uncertainty in the global economy,” said chief executive Martin Brudermüller. “The coronavirus has added a new factor that is considerably hampering growth at the beginning of the year.”
The group’s full-year pre-tax earnings fell by almost €2bn to €4.1bn, while sales slipped 1.5 per cent.
“The trade conflicts between the US and China had a negative impact,” said Mr Brudermüller. “Key sales markets developed more slowly. This was intensified by the uncertainties related to [the UK’s departure from the EU].”
He added that the company anticipated a continued decline in production in the global auto industry.
Nigeria reports first sub-Saharan case
Nigerian authorities have confirmed sub-Saharan Africa’s first case of coronavirus in Africa’s most populous nation, Neil Munshi in Lagos reported.
The case marks the first recorded spread of the virus to a part of the world many experts believe is least prepared for an outbreak because of poor health infrastructure. There have been two other cases in Africa, in more developed Egypt and Algeria.
Health ministry officials said an Italian businessman returning from Milan to the commercial capital Lagos, where he lives and works, was the west African country’s first case. The man arrived in Lagos on February 25 and is clinically stable, with no serious symptoms, the health minister said in a statement on Friday.
Authorities said the patient was being treated at the Infectious Disease Hospital in Lagos, and that they had started working to identify the man’s contacts since entering Nigeria.
After Algeria declared its first case on Tuesday, Dr Matshidiso Moeti, the World Health Organization’s regional director for Africa, warned that the “window of opportunity the continent has had to prepare for coronavirus disease is closing”.
While there have been questions within Nigeria about its ability to handle an outbreak given its shoddy healthcare system, health minister Dr E Osagie Ehanire urged Nigerians not to sow panic.
“Citizens must not abuse social media and indulge in spreading misinformation that causes fear and panic,” he said in the statement.
West German town puts 1,000 people in quarantine
Guy Chazan writes:
Around 1,000 people were quarantined at home in the west German town of Heinsberg as the coronavirus began to spread throughout Germany.
German media reported 14 new cases of infection in North Rhine-Westphalia, Germany’s most populous state, four in the southern state of Baden-Wuerttemberg and one each in Rhineland-Palatinate and Bavaria, bringing the total number of cases in Germany to 30.
These are in addition to the 16 people confirmed as infected two weeks ago who are now free of the virus.
Among the new cases in Baden-Wuerttemberg are two women and a man who had attended a business meeting in Munich. They are among the 13 people who came into contact with an Italian man who was tested positive for coronavirus in Italy.
The confirmed case in Rhineland-Palatinate had recently been in Iran and had contact with someone who appeared to show symptoms of the disease. The case in Bavaria was a man who had contact with an Italian infected with the virus.
NRW now has a total of 20 coronavirus infections, and Baden-Wuerttemberg 8. The 14 new cases in NRW are all being quarantined at home.
European stocks poised for heavy fall
European stock futures are down sharply with 20 minutes before the open as coronavirus fears grip investors.
Here’s a look at where we stand right now:
• Stoxx 50 futures down 3.3 per cent
• German Dax futures down 3.7 per cent
• French CAC 40 futures down 3.5 per cent
• UK FTSE 100 futures down 3.6 per cent
India suspends visa on arrival for Japan/South Korea
Amy Kazmin reports from New Delhi:
India suspended its special visa on arrival facilities for Japanese and South Korean citizens on Friday, citing the worsening coronavirus outbreaks there.
However, the Indian government has said that Japanese and South Korean citizens can still apply for visas ahead of their trips, and that such applications will be processed.
In early February, New Delhi suspended the issuance of any e-visas – for which visitors can apply online – to Chinese travellers, and also cancelled any extant e-visas. It said that any Chinese citizen that wished to travel to India would have to apply directly to the Indian embassy in Beijing or at one of several Indian consulates.
Since then, Beijing has called on India to restore “normal personnel exchanges” as soon as possible.
India has so far reported just three confirmed cases of coronavirus within country – all in students who had returned from Wuhan and who had since recovered. Another 16 Indians, working aboard the stricken Diamond Princess cruise ship, have also been infected, but remain in Japan, where they are undergoing treatment.
India has urged its citizens to avoid travelling to China, Singapore, South Korea, Italy or Iran,as it seeks to control the spread of the virus, and has warned that any travelers returning from those countries may be quarantined for 14 days.
British Airways parent and easyJet report tumbling demand
London-listed airline groups IAG and easyJet have each reported substantial knocks to demand from the spread of coronavirus and announced measures ranging from hiring freezes to aircraft redeployment as they seek to cushion the blow.
IAG, the parent of British Airways and Spain’s Iberia, said it expects capacity to be knocked by 1 to 2 per cent in terms of available seat kilometres, a key industry metric, as it cancels flights and bookings slow.
The group has suspended all its flights to mainland China, where the outbreak originated, and cut others across Asia. In Italy, where case numbers have surged this week, it said capacity has been “significantly reduced” for the coming month.
EasyJet, which operates low-cost short-haul flights across Europe, also said it had seen a “significant softening of demand” from northern Italy and across Europe and said it would be cancelling a number of flights out of Italy. However it said it was too early to quantify the impact on its results.
Airlines have suffered severe disruption from the spread of the disease, as travel restrictions coupled with an unwillingness to fly among many have caused demand to plummet. IAG said the cancellation of industry events and corporate travel restrictions had hit business travel particularly hard.
Shares in IAG and easyJet have each fallen by around a quarter since last month.
In an attempt to offset some of the impact IAG said British Airways had redeployed some of the freed-up long haul capacity from the Asian flight reductions by adding extra services to destinations with stronger demand such as India, South Africa and the US.
EasyJet said it was looking to cushion the blow by freezing recruitment, cutting administrative costs, offering unpaid leave to employees and redeploying aircraft.
US Treasuries rally anew in global flight to safety
US government debt yields are falling again as investors dash for safety in the worst week for the global equities markets since 2008.
The 10-year Treasury yield has fallen 0.1 percentage point to 1.198 per cent. It marks the first time in history US sovereign bonds of this tenor have fallen below 1.2 per cent. Yields on other Treasuries across the curve are also falling, pointing to broad-based buying of one of the world’s main haven assets by investors.
This week’s dramatic rally in Treasuries “reflects the sudden tightening of financial conditions,” said Anshul Pradhan, a strategist at Barclays.
Investors have reached for safety amid growing concerns that the coronavirus outbreak, and authorities’ response to it, will stunt global growth and deal a severe blow to corporate profits.
The MSCI All World index of developed and emerging market equities has slumped more than 9 per cent this week in the biggest fall since the global financial crisis in 2008. The decline in equities and other markets such as corporate debt will feed into the economy through the tightening in financial conditions, analysts have said.
Taiwan reports two more cases to raise its count to 34
Taiwan on Friday confirmed two more people have been infected with the coronavirus, raising its count to 34, reports Kathrin Hille.
One is a man in his 30s who started showing symptoms on February 25, three days after returning from a group tour to Japan. He is Taiwan’s first case of a Covid-19 infection believed to have been imported from a country other than China.
The other is a diabetic woman in her 50s who suffers from heart disease, spends most of her time at home and started showing symptoms a week after admission to hospital for different complaints.
Taiwan’s Epidemic Management Centre said since no other member of her household showed any symptoms, it would investigate their contact history to establish the infection source.
European stocks poised for worst week since 2008 after fresh drop
European stocks have opened sharply lower again, bringing their fall since the end of last week to more than 11 per cent.
The continent-wide Stoxx 600 index dropped 2.7 per cent just after the open and is now down 11.4 per cent for the week. The index has not posted such an intense rout since 2008.
Here is a look at other major indices:
• German Dax down 3.8 per cent
• French CAC 40 down 3.2 per cent
• UK FTSE 100 down 3.3 per cent
• US S&P 500 futures down 0.6 per cent
Bank of England says things ‘are getting tight’ with virus effect
Mark Carney, Bank of England governor, acknowledged on Friday that the impact of the coronavirus outbreak was going to hit the UK economy, saying the central bank had picked up signs of a slowdown from UK companies and those in the rest of the world.
“Things are getting tight,” the governor told Sky News, adding that it was “hard to be precise about the magnitude and, very importantly, the duration” of economic harm from the virus, but “the direction is down”, he said.
The BoE voted 7 to 2 against cutting interest rates at its January meeting, expecting an economic bounce from the end of political uncertainty. Markets now give a 31 per cent chance of a cut in rates at the March meeting, up from just 6 per cent a week ago.
Korean markets drop again as new cases outpace China
Edward White and Kang Buseong report from Seoul:
South Korean markets tumbled on Friday as the continued spike in confirmed cases outpaces new infections reported in China.
The benchmark Kospi index in Seoul closed the day down 3.3 per cent, at a six month low, after plunging 8 per cent this week.
Shares in Hyundai Motor closed 5 per cent lower after the group, which together with Kia makes up the world’s fifth biggest carmaker, suspended production at one of its factories Ulsan after a worker was diagnosed with coronavirus. The stock has fallen 10 per cent this week. Samsung Electronics, the country’s most important company fared little better, ending the week down 8.5 per cent and at its lowest point since December.
South Korea is the worst affected country outside China in terms of overall infections. It has now recorded 13 deaths and 2,337 confirmed cases, according to the latest data from the Korea Centers for Disease Control. That marks an increase from fewer than 50 confirmed just 10 days ago. The local CDC has reported daily increases of more than 500 new cases for the past two days. Beijing reported 327 new cases on Thursday.
The South Korean outbreak has centred on Daegu, the country’s fourth-biggest city, where most cases have been linked to the Shincheonji Church of Jesus. There are also continued calls the government of Moon Jae-in to stop allowing visitors from China into the country.
The South Korean infection rate also follows a rapid increase in testing in recent days. Nearly 50,000 people have been cleared as negative for the virus after testing and a further 30,000 are being tested, officials said.
Seoul on Friday announced Won16tn ($13.2bn) of emergency financial support to cushion the blow to Asia’s fourth-largest economy from coronavirus as domestic consumption and activity slows.
Iranian MP says four parliamentarians have been infected
Najmeh Bozorgmehr reports from Tehran:
Four members of Iran’s parliament have so far tested positive, according to a social media post by one MP.
In a post on Twitter on Friday, Mohammad Ali Vakili said 30 out of 290 members of the legislative body have gone through tests.
He did not name those infected, but two of them are suspected to be parliamentarians from the holy city of Qom — the origin of the outbreak in Iran. Masoumeh Ebtekar, a vice president for women’s affairs was found to have been infected on Thursday.
On Thursday night, Iran’s Revolutionary Guard deployed forces to clean the streets of Qom, including on the routes leading to the shrine. The elite force also carried out similar operation in southwestern city of Ahvaz.
Meanwhile, there are concerns over medical teams becoming infected after a number of nurses were reported to have died. The head of Qom medical university and two of his deputies have tested positive.
Global cases pass 83,000
Confirmed coronavirus infections have risen to 83,391, according to the latest data. 2,858 people have died.
Cases have surged in South Korea, while in Europe infection numbers in Italy have risen sharply.
Steve Bernard, interactive design editor, has mapped the figures:
Oil-dependent stocks and exporters drag Russian index down 5 per cent
Russia’s benchmark stock index Moex opened down 4.8 per cent on Friday, dragged down by the country’s oil-dependent stocks and export-led natural resource companies, Henry Foy reports.
The rouble tumbled to its lowest level since September, passing Rbs67 to the dollar as it extended its weekly fall to almost 5 per cent on fears that the effects of the virus Covid-19 will slash global growth and trade, hurting Russian exports.
“The brutal EM stock selloff is a liquidity seeking operation, last seen in 2008,” said Slava Smolyaninov, an analyst at BCS Global Markets in Moscow. “Investors in stocks have ignored all risks for too long and [are] only just awakening.”
The analyst added: “We see the market down further.”
Oil producers Lukoil and Rosneft fell 2.3 per cent and 2.9 per cent in early trading while metals exporter Norilsk Nickel was 2.8 per cent lower.
Russia bars Iranian and South Korean citizens from entering country
Max Seddon reports from Moscow:
Russia’s government said on Friday that it would temporarily bar entry to citizens of Iran and South Korea to stop the spread of the coronavirus.
The ban prevents Iranians and South Koreans from crossing the border on work, study, tourist, and personal visas, according to decrees signed by prime minister Mikhail Mishustin and published on Friday.
The measures are “dictated by extraordinary circumstances and are strictly temporary in nature,” the decree said.
Moscow banned most flights between Russia and the two countries earlier this week. It has also temporarily banned most Chinese people from entry and suspended all but a few flights to the country.
Brent tumbles as stock sell-off intensifies
Brent crude, the international oil marker, has fallen 4 per cent this morning, as the global market sell off continues into European trading.
Brent was recently at $50.08, its lowest since mid-2017, as the coronavirus spread cripples oil demand.
The sell off in equity markets has continued meanwhile, with the Stoxx Europe 600 down 4.5 per cent. It is on track for its worst week since the depths of the financial crisis.
In London the FTSE 100 has fallen 4 per cent. Frankfurt’s Dax is down 5 per cent and the Cac in Paris is off 4.4 per cent.
European travel and leisure stocks poised for worst week since 9/11
The Stoxx 600 travel and leisure index is on track for its worst weekly percentage slide since the terrorist attacks in the US on September 11 2001.
The index of 17 shares in European companies has fallen 18.8 per cent this week, with British Airways parent IAG being the most hit with a 8.5 per cent fall. That is worse than the 18.5 per cent slide of October 2008. The week ending September 14 2001 recorded a 20 per cent dive.
The travel and leisure industry has been particularly battered by the impact of the coronavirus as airlines have cancelled flights and people have veered away from booking their summer holidays for fear of the virus spreading. Italy is the worst affected European country with 17 deaths related to the virus.
London-listed airline groups IAG and easyJet on Friday reported substantial knocks in demand from the spread of Covid-19. The two European airlines set out measures ranging from hiring freezes to aircraft redeployment as they seek to cushion the blow.
IAG, the parent of British Airways and Spain’s Iberia, said it expected capacity to be hit by 1 to 2 per cent in terms of available seat kilometres, a key industry metric, as it cancelled flights and bookings slowed.
Norwegian Air, whose shares have fallen 50 per cent this week, bucked the trend on Friday morning with a rise of 7 per cent.
Switzerland bans large public gatherings
The Swiss government has banned all events involving more than 1,000 people amid the coronavirus outbreak, according to a report by the PA news agency.
Russia’s EN+ shares take a coronavirus hit in Moscow
Shares in Russia’s EN+ holding and its aluminium subsidiary Rusal fell after the group said it expected a negative impact from weak demand in the first half of this year due to the spread of the coronavirus, reports Nastassia Astrasheusk in Moscow.
The price of EN+ shares dropped 6 per cent in Moscow trading on Friday while Rusal stocks fell 4 per cent.
“The coronavirus will negatively affect aluminum market in China in the first half with expectations of bigger supply surplus and weak demand,” the group said.
Alumina refining, in certain areas in particular, is suffering from logistics issues for both bauxite arrivals and shipping out of alumina. Lower aluminum demand in China and excessive inventories may affect prices and ultimately delay new aluminium smelting capacity ramp up.
The holding expects Chinese aluminum exports to decline in January-February amid slowed trading activity due to the Chinese lunar new year holiday and coronavirus effects, it said.
Wales confirms first case
Wales has confirmed its first case of coronavirus, while two more have been declared in England, bringing total UK infections to 19.
The individual who tested positive in Wales had travelled back from northern Italy, Welsh chief medical officer Dr Frank Atherton said, adding that “all appropriate measures” were being taken to provide care for the patient and reduce the risk of transmission to others.
The patients in England were infected in Iran and have been transferred to specialist NHS infection centres at the Royal Free Hospital, UK chief medical officer Professor Chris Whitty said.
Students ditch plans to study abroad due to virus fears
Andrew Jack reports:
A tenth of international students planning to study abroad will cancel their plans and more than a third will defer because of fears over the spread of coronavirus infection, reveals a survey, which adds to financial concerns for universities reliant on foreign fee income.
Among 2,000 students around the world who had been planning to study abroad, 37 per cent said they would defer and 32 per cent switch their intended country of study. A tenth said they no longer want to go abroad.
The research, conducted by QS, publisher of the World University Rankings, will raise concerns among universities in some countries, such as Australia, the UK and the US, which have become reliant on international student fee income.
Finnair considers temporary staff layoffs as virus hits profits
Richard Milne, Nordic and Baltic Correspondent, reports:
Finnair issued a profit warning over the impact from the coronavirus epidemic, saying that its operating result this year was likely to be “significantly lower” than in 2019 and that it may need to lay off staff temporarily.
Finland’s flag carrier revised its outlook from just three weeks ago when it said coronavirus would have “relatively limited” impact on its first-quarter results. On Friday, it said its operating profit in the first quarter would now be lower than last year’s and forecast the same for the next three months.
Shares in Finnair fell 3 per cent on Friday, and are down almost a quarter since February 11 amid growing investor worries about the impact of the virus on airlines.
Finnair said it was looking to save €40m-€50m including through potential temporary layoffs “or similar measures involving all personnel”.
Topi Manner, Finnair’s chief executive, said:
As the coronavirus situation has entered a new phase with outbreaks in several new countries, we will take appropriate measures to adapt our costs, operations and resources to better match our revenues. While the spread of the coronavirus has had a limited impact on our operations so far, we now see a negative impact on demand.
Japan’s fifth death underlines testing difficulties
Robin Harding reports from Tokyo:
Japan has recorded its fifth death from the coronavirus in a case that highlighted the long course of the disease and the difficulties of testing for it.
The patient, a man in his 70s from Wakayama prefecture, fell ill on February 1 with a cold and vomiting. On February 5 he developed a fever and was admitted to hospital, where he tested positive for the coronavirus on the 13th and began artificial ventilation.
On February 21 and again on the 24th he tested negative for coronavirus using the standard polymerase chain reaction test. On the 26th, his breathing symptoms got worse, and on the 28th he died.
Japan now has 200 domestic cases of coronavirus and five deaths. A fifth death was reported on Friday from the Diamond Princess cruise ship, where a total of 705 passengers and crew have caught the virus.
Brent on cusp of dropping below $50 a barrel
Anjli Raval, Senior Energy Correspondent, reports:
Brent crude, the international crude benchmark, was on the brink of dropping below $50 a barrel for the first time since July 2017 as fears proliferated that the spread of coronavirus could hit the global economy and oil demand growth.
“Plunge, dive, rout, roil, collapse, shred, swoon, whichever synonym you prefer, the sell-off in crude continues along with the general sell off in markets as Covid-19 fears escalate,” said Colin Smith at Panmure Gordon.
Saudi Arabia, Opec’s largest producer country and de facto leader, is pushing the group and allies including Russia to make a substantial cut in oil production when officials meet in Vienna next week to contain the fallout on oil prices.
The kingdom is asking producers including Russia to sign up to a collective production cut of an additional 1m barrels a day, according to five people familiar with the talks, a significantly higher amount than provisionally discussed when the so-called Opec+ group agreed to convene.
Coronavirus outbreaks have spread to northern Italy, South Korea and parts of California and traders are assessing the impact on the crude market of further shutdowns of cities beyond China, which is the biggest source of oil demand growth.
The marker fell as much as 4 per cent this morning to $50.05 before paring some of its losses to recently trade down 3.3 per cent at $50.48. It has fallen 30 per cent since early January.
Iran to begin production of virus test kits
Najmeh Bozorgmehr reports from Tehran:
Iran – which has suffered the worst death toll from the virus outside China – has announced that its ministry of defence will begin production of coronavirus test kits next week.
A spokesman for the health ministry said in a Twitter post on Friday that production would start after “final approval” in the coming days as the country rushes to stem the spread of the disease.
Meanwhile Iranian authorities said schools which have been shut down since last week could resume on Saturday via online lessons. The state broadcaster said some lessons including mathematics would be taught via television.
This is partly to stop families from traveling when schools are shut down — something believed to have led Gilan province on the Caspian Sea coast to become one of the worst affected areas.
Families have been warned they could be stopped on the road and quarantined for 14 days if medical teams detect any symptoms.
Belarus, Azerbaijan record first coronavirus cases
Belarus has announced its first case of coronavirus, in an Iranian citizen studying at a university in the country, Henry Foy in Moscow writes.
This was followed swiftly by the first case in Azerbaijan, a Russian citizen who arrived in the country from Iran.
Belarus, the former Soviet republic which lies between Russia and Poland, said it would step up checks at airports but would not close its borders. Russia and Belarus allow free movement of their citizens across the frontier.
Russia has five confirmed cases of the virus, including two Chinese nationals and three Russians who were repatriated after contracting it aboard the Diamond Princess cruise ship.
Russia has closed almost all of its border crossings with China and moved to prevent Chinese, Iranian and South Korean citizens entering the country.
New Zealand and Nigeria also confirmed their first cases of the virus on Friday. It has now spread to 54 countries.
World’s biggest hospitality conference postponed
Alice Hancock, Leisure Industries Correspondent, reports:
The hospitality industry’s biggest conference, IHIF, was postponed on Friday. It was due to be held at the InterContinental hotel in Berlin from Monday to Wednesday next week with more than 2,400 attendees.
Paul Miller, chief executive of Questex, which organises the event, said:
This was a very difficult decision as many in the community were asking us to proceed with the show. Ultimately there is no greater importance than the health and safety of our community members and that will always be the guiding principle that drives our business.
Questex’s EMEA managing director Alexi Khajavi said that going ahead would have been “irresponsible”.
The event had been intended to go ahead with English speaking medical teams brought in to monitor for any potential outbreaks of coronavirus.
It has been rescheduled to May 4-6, provided the virus is no longer an issue.
Wall Street volatility barometer lurches higher
A closely watched measure of expected tumult in US stocks has almost tripled this week, highlighting the rising angst among Wall Street investors.
The Vix index, a measure of implied volatility over the next month, has jumped as high as 47.2, a jump of 8 points today alone. It closed last week 17.
The index is now well above its long-run average of 20, suggesting traders have raced to hedge against or speculate on further volatility in the US stock market.
Iran records rise in deaths from coronavirus infection
Iran said on Friday that the number of deaths has risen to 34, up from 26 a day earlier, while those tested positive have climbed to 388 from 245, reports Najmeh Bozorgmehr in Tehran.
Kianush Jahanpur, a health ministry spokesman, called on people not to travel, regretting that Iranians’ holidays to northern provinces including Gilan along the Caspian Sea had increased.
Iran’s senior officials, some cabinet members and military figures had an emergency meeting on Friday, led by first vice-president Es’haq Jahangiri. No details of any new measures were immediately available.
Aluminium and zinc bear brunt of metals sell-off
Henry Sanderson reports from London:
Aluminium and zinc prices fell to their lowest levels in over three years on Friday as they bore the brunt of a widespread sell-off in commodities markets.
Prices for the industrial metals have been hardest hit by weakening in demand in China due to the outbreak of the coronavirus.
Zinc, which is used to galvanise steel, has fallen by 19 per cent since mid-January, while aluminum is down by 7 per cent.
On Thursday, the China Nonferrous Metals Industry Association urged the government to stockpile metals from the country’s smelters to alleviate the build-up in inventories.
The sell-off in metals markets has hit shares in the largest producers outside of China. Shares in aluminium producer Norsk Hydro have fallen by 19 per cent this year on the Oslo Stock Exchange.
Eoin Dinsmore, an analyst at consultancy CRU, said he estimates Chinese demand for aluminium fell by 19 per cent in February. He said:
The disruption to broader manufacturing from disrupted Chinese supply chains means it’s unlikely we’ll see a positive demand impact globally … We expect demand outside China will fall in 2020.”
Prices for aluminum last traded down 1 per cent at $1,680 a tonne while zinc was down by 0.4 per cent at $2,017 a tonne on the London Metal Exchange, its lowest level since June 2016.
China’s growth to be hit by up to 0.8 percentage points, poll shows
Nearly half of economists in a poll expect the impact from the spread of the coronavirus to slow China’s economic growth by 0.5 to 0.8 percentage points this year, reports Valentina Romei in London.
However, the remaining half show a variance in views, almost equally split between a smaller or greater impact on China’s expansion than that range, a survey of nearly 70 economists by Focus Economics, a research and forecasting company, revealed.
The variation reflects the difficulties in forecasting the duration and extent of the epidemic.
More consensus emerges on the impact on global growth with most of those surveyed in the five days to February 19 expecting a hit for this year of up to 0.2 percentage points. Nearly all panelists expect the impact of the virus not to last beyond 2020.
Hong Kong is among the country whose economic growth has been sharply revised down. Its gross domestic product is expected to contract 0.7 per cent in 2020, down 0.7 percentage points from last month’s forecast, according to Focus Economics.
But, “the recent outbreak in Italy raises the risk of a larger economic impact there and a spread to neighboring European countries,” said Arne Pohlman, chief economist at Focus Economics.
Germany plays down likelihood of epidemic as cases rise to 60
Guy Chazan reports from Berlin:
German officials said the country now had around 60 confirmed cases of coronavirus infection.
But officials played down the danger of an epidemic. Lars Schaade, vice president of the Robert Koch Institute, said the risk for Germany “can be assessed as low to moderate”. He noted that only one of the people infected so far in Germany was seriously ill.
Some 1,000 people are currently in quarantine at home in the western state of North Rhine-Westphalia, which has registered 14 new cases of the disease. The southern state of Baden-Wuerttemberg has recorded another 4, and the states of Rhineland-Palatinate, Hesse and Bavaria one each.
In addition, authorities confirmed that an employee of a clinic in the northern port city of Hamburg had been infected, marking the city state’s first case of coronavirus infection. All children and parents who had come into contact with the man, as well as his colleagues, were being sent into quarantine for 14 days, authorities said.
A government crisis committee will meet on Friday afternoon to discuss the situation.
Officials are currently discussing whether the International Tourism Fair (ITB), which is scheduled to be held March 4 in Berlin, should be cancelled. A spokeswoman for the federal health ministry said it was up to local authorities to decide whether to call off the event.
Editorial: The global struggle to contain coronavirus
A tale of two intersecting curves is how the global progress of coronavirus could be described: one shows the daily number of new Covid-19 cases in China soaring to a peak in early February and declining steeply since then; the other curve, plotting new cases in the rest of the world, is on an exponential upward path and on Tuesday exceeded Chinese cases.
China has cut its infection rate through an aggressive, even brutal, programme of what public health professionals call social distancing. Such stringent quarantine measures, including locking down cities for long periods, are unlikely to be acceptable in less authoritarian countries. But if Covid-19 becomes a pandemic, everywhere will have to consider what social distancing measures to adopt.
Read more of the the Financial Times’ editorial exploring how social distancing measures will play an important role in delaying a pandemic.
US junk bond market hit by dash to safety
US junk bonds have been hit as investors rotated this week away from riskier assets and into perceived havens.
The premium in yield demanded to hold speculative-rated debt has lurched higher to 4.6 percentage points from 3.7 points last Friday, according to ICE Data Indices.
The Federal Reserve pays close attention to junk bond spreads as a proxy for investor sentiment and financial conditions more broadly.
This week’s rise in the junk bond spread comes as the price of the paper has fallen, which has pushed yields higher. It also reflects a decline in Treasury yields — which act as a benchmark for the spread. US government debt has rallied strongly as investors have sought shelter amid rising economic jitters.
South Africa and Kenya braced as virus spreads to sub-Saharan Africa
Joseph Cotterill in Johannesburg and Donald Magomere in Nairobi report:
Authorities in South Africa and Kenya are readying themselves for the eventual arrival of the coronavirus after Nigeria confirmed the first sub-Saharan African case and international infections continued to spread.
While neither country has yet to record any cases of the virus, South Africa’s national institute for communicable diseases said on Friday that given the recent spread it was “not unlikely” that the disease would spread further in the continent.
The caution comes as President Cyril Ramaphosa’s government is preparing to return home over a hundred South African citizens from the Chinese city of Wuhan, where they have been living in lockdown since the outbreak began.
None of the South African returnees have been diagnosed with, or shown any sign of, the virus and will be placed in additional quarantine measures for 21 days after they arrive, Mr Ramaphosa’s office said.
South Africa initially followed Chinese government advice to avoid repatriation but has changed its policy “after due consideration of the circumstances, and following several requests from the families of South Africans in the city,” according to the South African presidency.
South Africa’s Mail and Guardian newspaper has reported that returnees may be taken to a remote area of the country’s Free State province for the quarantine.
In Kenya, meanwhile, the government has formed a national emergency response committee by executive order of President Uhuru Kenyatta, requiring the completion of treatment facility at a Nairobi hospital.
The Kenyan ministry of defence is set to deploy military officers to take charge of all entry points to the country, including airports, maritime ports and all border areas to contain any outbreak of the virus.
Geneva Motor Show cancelled as Switzerland bans large gatherings
Peter Campbell, Motor Industry Correspondent, reports:
The Geneva Motor Show, which had been due to start on Monday, has been cancelled following a ban from the Swiss authorities on events attended by more than 1,000 people.
The move comes after days of indecision as the organisers waited for the government to issue a ban, which would allow them to cancel the event without incurring insurance costs from manufacturers who have paid millions to set up stalls at the event.
The ban lasts until March 15, which had been due to be the final day of the exhibition.
It is the latest event across Europe to be axed due to the coronavirus outbreak. Geneva’s watch show in April was cancelled while the Mobile World Congress telecoms conference in Barcelona, scheduled to start on February 24, was also canned.
Carmakers had been building stands and transporting vehicles for several days, with most of the stands on the site completed, according to several people involved in the process. The stands will have to be dismantled.
“The financial consequences for all those involved in the event are significant and will need to be assessed over the coming weeks,” said Maurice Turrettini, chairman of the Foundation Board, who added that tickets purchased by the public ahead of the show will be refunded.
As recently as Wednesday evening the organising body for Geneva Motor Show said the event would go ahead, advising “exhibitors from at-risk areas to ensure that their staff pass the necessary checks” before attending.
On Friday Mr Turrettini defended the decision to wait until the end of the week to cancel the event, something that had been widely expected by car executives and media who had been due to attend.
A meeting on Wednesday of the ACEA board, involving the heads of Europe’s major carmakers who all expected to be in the country for the motor show, will be held virtually, according to two sources, avoiding the need for executives to fly into the country where eight cases of the virus have been reported.
Singapore’s leadership to take one-month pay cut over virus concerns
Singapore’s president will join ministers in taking a pay reduction as the city state seeks to contain the spread of the disease.
“The political leadership will do our part,” Heng Swee Keat, deputy prime minister and minister for finance, told parliament on Friday. “To show solidarity with fellow Singaporeans, all political office holders will take a one-month cut in their salary,” he said.
MPs will take a one-month cut in their allowance while senior public servants will take a half-monthly pay cut, the minister said as he rounded up the debate on the budget in parliament.
Singapore was one of the worst hit after China when the virus Covid-19 was initially detected but its rate of infection has slowed and been overtaken by other nations. The island state has recorded no deaths and 93 infected with the disease, of which 62 have recovered.
French finance minister warns against ‘economic panic’
Victor Mallet reports from Paris
France’s finance minister Bruno Le Maire said on Friday it was important to avoid an “economic panic” over the coronavirus, although he predicted that the hit to economic growth this year was set to be worse than previously forecast now that the epidemic had spread beyond China.
He also announced that the state would allow companies to declare the epidemic as a cause of force majeure if it prevented them fulfilling contracts, and would permit employers to reduce the number of working hours — a practice known in France as “partial unemployment” — in response to a loss of business.
“We need to keep our cool and our sense of responsibility to avoid any economic panic and any useless panic in the markets,” he said after a meeting between government ministers, employers and trade unions.
Mr Le Maire had previously said the coronavirus outbreak in China would knock a tenth of a percentage point off French growth this year. On Friday, he said that number was likely to rise following the international spread of the disease, but he declined to give any more precise forecast and criticised the distribution of “fantasy figures” about the economic impact.
France has so far officially announced only 38 cases of coronavirus — 14 of them linked to an outbreak in the Oise department north of Paris — but there are patients hospitalised in different towns across the country and the total number is expected to rise in the days ahead.
Law firm Baker McKenzie closes London office
Baker McKenzie closed its London office on Friday after a member of staff reported feeling ill after returning from northern Italy on holiday, writes Kate Beioley in London.
The US law firm has sent about 1,000 staff members home while the individual is tested. It will update staff on Sunday about whether they can return to the office.
The firm’s Milan office has been working from home since the start of the week and its Singapore base has instituted split working, in which the office takes it in turn to come to work. According to a person within the firm, meetings and conferences are taking place using video and teleconferencing.
“Our priority is the health and wellbeing of our people and our clients and we have asked our London office employees to work from home for the time being while we are taking precautionary measures in response to a potential case of the Covid-19,”
a spokesperson said.
“We have a well-established agile working programme, including technology and IT systems for home working, which allows us to take these precautionary measures without impacting our client service delivery. We continue to closely monitor the situation and are following the advice and guidance issued by the government and Public Health England.”
Coronavirus to weigh on German economy, Bundesbank chief says
Martin Arnold writes:
The head of Germany’s central bank has warned that he expects the disruption of the coronavirus to weigh on the country’s already-weak economy, while saying it was too early for a monetary policy stimulus.
Jens Weidmann said: “In the short term, the spread of the coronavirus represents an additional risk to the German economy.” He added: “Based on the current information, I am expecting this risk to actually materialise to a degree.”
“On the whole, economic growth in Germany this year could turn out somewhat lower than projected last December by our experts,” he said. The German economy slowed to a standstill in the final three months of 2019 and the Bundesbank forecast in December that in 2020 growth would be 0.6 per cent – the same as last year.
Mr Weidmann said it was too early to consider easing monetary policy in response to the economic impact of the coronavirus. Questioning whether such a stimulus would have much effect on demand he asked, “whether you’re likely to go out to restaurants more often’’ if interest rates were lower but people feared catching the respiratory virus.
His cautious approach echoes that of Christine Lagarde, the president of the European Central Bank, who told the Financial Times on Thursday that while the bank was monitoring the impact of coronavirus very carefully, it was too early to consider it a “long-lasting shock” that required a monetary policy response.
Some 1,000 people are currently in quarantine at home in Germany’s western state of North Rhine-Westphalia, which has registered 14 new cases of the disease. Overall German officials said the country now had around 60 confirmed cases of coronavirus infection.
Mr Weidmann said the German economy was already facing knock-on effects from the outbreak, which started in China and has spread to several other countries. He said these spill-over effects included “reduced demand for goods, tourists staying home or delivery difficulties concerning key intermediate goods”.
“As things stand today, it is almost impossible to gauge the effect reliably. It may well only show up with a significant time lag,” said the Bundesbank boss, adding: “Should an epidemic break out in Germany, direct economic impacts must be expected alongside these ripple effects.”
Reinfection – is it happening?
Reports are emerging of coronavirus “re-infecting” people who had apparently cleared the disease – two this week in Japan and some earlier in China. But experts are shedding doubt on whether re-infection is really taking place, science editor Clive Cookson writes.
Mark Harris, virology professor at Leeds university, says:
It is unlikely that [patients] would have been re-infected having cleared the virus, as they would most likely have mounted an immune response to the virus that would prevent such reinfection.
The other possibility therefore is that they did not in fact clear the infection but remained persistently infected. Although coronaviruses generally cause short-term self-limiting infections which are cleared, there is some evidence in the scientific literature for persistent infections of animal coronaviruses.
A more likely scenario than re-infection is that the immune system suppressed coronavirus to a low level – too low to detect in viral tests of swabs from the patients – and the virus then surged back, causing symptoms to reappear.
Prof Rowland Kao, an epidemiologist at the University of Edinburgh, says:
Given the number of reported cases thus far, it would seem unlikely that this is a common occurrence, and thus should have only a small impact on the overall epidemic projections themselves.
But all medical specialists say they still have much to learn about the natural history of the new coronavirus and, in particular, its interaction with the human immune system.
If re-infection really does take place because people mount a very weak response to infection, that would be bad news for the development of a vaccine.
Virus impact hangs over tentative pickup of India’s economy
India’s economy accelerated in the fourth quarter in the first indicator of a mild pickup after six quarters of slowing growth, reports Amy Kazmin, South Asia bureau chief.
Gross domestic product expanded 4.7 percent in the final three months of 2019, compared with the previous quarter’s 4.5 per cent increase.
However, growing anxieties over the global impact of the coronavirus outbreak has dashed any optimism that the economy may be starting to recover.
The Bombay Stock Exchange Sensex fell 3.6 percent on Friday, echoing the sharp fall in global markets.
New Delhi has forecast full-year growth for the current April 1 to March 31 financial year at 5 percent. But analysts say that India’s growth could suffer from the coronavirus outbreak in China, a nation it depends on for many raw materials and components.
“The coronavirus [impact] is going to pull down global growth,” Shaktikanta Das, governor of the Reserve Bank of India, told an Indian television channel, but he said the impact on India is tough to measure.
“There are so many uncertainties,” he said. “We need some more time to arrive at more accurate conclusions.”
Bets show 60% chance Olympics will be cancelled, Paddy Power says
Bookmaker Paddy Power has said it is significantly more likely that the Tokyo summer Olympic Games will be cancelled than go ahead.
The betting shop said there is a 60 per cent chance of the games being called off, cutting the odds to 4/6. Odds that they will proceed are at 11/6.
A Paddy Power spokesperson said:
More people are being infected by coronavirus, including in Japan, and we make it odds-on for officials [to] move to cancel the Tokyo Olympic Games. In fact, we see it as far more likely that they will be off, than on, at this stage.
The World Health Organization on Thursday said that it was working with the International Olympic Committee and Japanese authorities, but that it did not expect any decision on the games in the near term.
Infection spread accelerates outside China
The coronavirus infection is spreading more rapidly outside China as this China v rest of world chart shows:
Worldwide, the virus has claimed 2,788 lives while 83,774 cases have been confirmed. Mainland China, still the worst hit especially in its province Hubei where the outbreak was first detected, has 78,824 infected.
Iran has recorded 34 deaths and Italy 17.
British man becomes sixth infected cruise liner passenger to die
A British man has become the sixth passenger from the Diamond Princess cruise ship to die from Covid-19, Japan’s health ministry reported on Friday evening local time. It gave no further details of his name or age, reports Robin Harding in Tokyo.
The cruise ship suffered an extensive outbreak of the coronavirus, with the passengers and crew spending two weeks under quarantine in Yokohama. Of 3,711 people on board, 705 were diagnosed with the disease.
Passengers found to have been infected were removed to hospitals in Japan. An evacuation flight carrying 32 British and European passengers released from quarantine flew to the UK a week ago.
Iran says deaths set to peak as it warns of ‘difficult’ week ahead
Najmeh Bozorgmehr in Tehran reports:
Iran’s health minister, Saeed Namaki, has warned “a relatively difficult week” lies ahead for the country, with casualties expected to reach their “main peak”.
The country has been the worst hit outside of China in terms of deaths from the coronavirus outbreak, with 34 casualties, according to the latest government figures. 388 people have tested positive for the disease.
As more virus test kits arrive in the country, the number of infections detected has grown, leading authorities to predict a peak in causalties next week.
The World Health Organisation said on Friday it was sending a fifth batch of test kits and to Iran, despite the difficulties caused by flight restrictions.
Although Iran faces US sanctions, the Islamic republic’s authorities insist they have faced no impediments to the timely importing of test kits, thanks to assistance provided by WHO as well as China.
Meanwhile, Mr Namaki said that there would be more controls imposed on people’s movements. Further restrictions are set to be placed on road travel to prevent unnecessary trips to provinces infected with coronavirus. A government spokesperson called on Iranians to cooperate more with authorities.
Mexico claims first Covid-19 case
Mexico has reported its first confirmed case of Covid-19 after a man who had travelled to Italy and is being held in isolation in a hospital in Mexico City tested positive for the virus, reports Jude Webber in Mexico City.
It is the second confirmed case in Latin America after a positive coronavirus case in Brazil this week.
Another potential case was reported in the northern state of Sinaloa but further tests are pending, officials said.
President Andrés Manuel López Obrador told his morning news conference that “we have the doctors, specialists, capacity to deal with this case and as this develops we will attend to the cases. We are prepared.”
He assured Mexicans that “it’s not something terrible, fatal, it’s not even equivalent to influenza” and appealed for there to be “no exaggerations, no collective psychosis”.
Baselworld trade show cancelled after Switzerland bans large gatherings
Sam Jones reports from Flims
Baselworld, the most important commercial event of the year for Swiss watchmaking industry, has been cancelled following a decision by Swiss authorities to ban large scale gatherings in the country in a bid to stop the spread of the novel coronavirus.
The trade show, which draws around 100,000 people to the city of Basel, is a crucial date for Swiss horology. The industry’s leading brands use the exhibition as an opportunity to showcase their latest designs and secure orders with leading retailers and wealthy individual customers.
Exports of Swiss watches were worth SFr22bn last year.
Baselworld managing director Michel Loris-Melikoff said:
We deeply regret having had to postpone the event as planned due to the coronavirus, in full consideration of the needs of the watch and jewellery industry to be able to benefit from the platform to develop their business.
Bern announced this morning it was banning all large scale public and commercial events involving more than 1,000 people. The ban, which takes immediate effect and will last until March 15, has already led to the cancellation of some of the most important trade shows in the global luxury market.
The Geneva Motor Show, one of the car industry’s most popular events, which attracted 600,000 guests last year, was called off this morning ahead of its scheduled opening next week.
Wall Street extends sell-off
US stocks resumed their sell-off, falling deeper into correction territory, as concerns over the coronavirus outbreak continued to put global equities under pressure.
The S&P 500 slipped more than 3 per cent at the open and was recently down 2.8 per cent, putting the benchmark index on track for its seventh consecutive decline. The Nasdaq Composite was down 2.9 per cent, while the Dow Jones Industrial Average fell 2.5 per cent.
The yield on the 10-year Treasury note, which hit fresh record lows on Friday, was down 10.8 basis points at 1.191 per cent.
The MSCI index of developed and emerging market stocks is now down 2.4 per cent for Friday, and 11 per cent since the end of last week. The index has not posted such an intense weekly drop since the depths of the financial crisis in 2008.
US junk bond ETFs under pressure
Two of the main exchange traded funds tracking US junk bonds have come under renewed pressure, pointing to further declines in the asset class.
BlackRock’s HYG fund dropped 0.4 per cent in early Wall Street dealings, with the State Street equivalent JNK down 0.5 per cent.
Both funds have dropped more than 3 per cent this week as investors have rotated away from riskier assets and into havens like Treasuries. Investors yanked $6.8bn from junk bond mutual funds and ETFs in the week through Wednesday, the biggest outflow in more than a year, according to EPFR Global data.
HYG faced outflows of $4bn with traders pulling $1.2bn from JNK.
The risk premium investors demand to hold junk bonds, which are rated below their investment grade peers, has jumped to 4.6 percentage points from 3.7 points last Friday, according to ICE Data Indices data based on yesterday’s closing prices.
Bets on a Fed rate cut surge as sell-off gathers pace
Tommy Stubbington, Capital Markets Reporter, writes:
Bets on a quick-fire rate cut by the Federal Reserve have spiked dramatically as the coronavirus-fuelled selloff in markets intensifies.
Following a huge move in short-term US rates markets, which began late on Thursday and accelerated on Friday, traders are now pricing in almost one and a half rate cuts by the Fed’s March meeting. That compares to Wednesday’s levels, which implied roughly a one in three chance of a single 0.25 percentage point cut.
The speed of the move suggests investors are now seriously considering that the Fed could cut by half a point in March, or even announce an emergency rate cut ahead of the scheduled meeting, according to John Briggs, head of US strategy at NatWest Markets.
“It’s a dramatic increase in Fed pricing,” he said. The Fed’s policy committee would probably put out a statement saying it is watching the deterioration of market conditions — as it did in August 2007 — before any unscheduled rate cut, he added.
Bullard: US rate cuts a possibility if coronavirus intensifies into a pandemic
Rate cuts by the Federal Reserve are a possibility if the coronavirus outbreak intensifies into a global pandemic, St. Louis Federal Reserve president James Bullard said.
“Further policy rate cuts are a possibility if a global pandemic actually develops with health effects approaching the scale of ordinary influenza, but this is not the baseline case at this time,” Mr Bullard said in a speech to the Fort Smith, Arkansas chamber of commerce.
Mr Bullard, who is not a voting member of the Federal Open Market Committee, said the three rate cuts delivered by the Fed in 2019 as part of its mid-cycle policy adjustment put the FOMC in a “good position” as it closely monitors the impact of the outbreak on the economy. He noted that policy effects materialise with a lag and the previous rate cuts will continue to have an impact as the disease unfolds.
The World Health Organisation has refused to call the coronavirus a pandemic for now because it doesn’t believe the outbreak has met all the markers to match that definition yet. There have been more than 83,000 confirmed cases so far and the death toll from the outbreak has climbed to more than 2,800.
Worries about the economic fallout from the disease has prompted warning from a number of blue chip companies and Goldman Sachs has predicted zero earnings growth for US companies this year.
Separately, Dallas Fed Reserve president Robert Kaplan said he does not want to see negative interest rates in the US and urged reassessing broader economic policy beyond just lowering interest rates. Mr Kaplan added it was too soon to comment on what the Fed might do amid market turmoil.
Iran suspends parliament
Najmeh Bozorgmehr reports from Tehran:
Iran has shut down its parliament on fears over the spread of coronavirus, leaving approval of its budget for the next financial year unfinished.
Asadollah Abbasi, a spokesman for the parliament, said on Friday that the legislative body will stop meeting “until further notice”. He added that only a twelfth of the budget will be approved, enough to prevent any immediate financial shortage as the new financial year begins later this month.
At least four members of parliament have been infected with the virus, two of whom are believed to be from Qom, the origin of the virus within Iran. Tens of parliamentarians have gone through tests, the results of which have not been announced yet. A deputy health minister and a vice president have also been infected.
WHO escalates risk assessment of Covid-19 to “very high” at a global level
Clive Cookson in London
The World Health Organization on Friday raised its risk assessment over the spread and potential impacts of the new coronavirus stemming from China to “very high” at a global level.
But the WHO is still refraining from talking about a pandemic. Dr Tedros Adhanom Ghebreyesus, director-general, said:
What we see at the moment are linked epidemics of Covid-19 in several countries but most cases can still be traced to known contacts or clusters of cases. We do not see evidence as yet that the virus is spreading freely in communities.
Since yesterday Denmark, Estonia, Lithuania, Netherlands and Nigeria have reported their first cases, Dr Tedros said. All these cases have links to Italy.
Altogether 24 cases have been exported from Italy to 14 countries, and 97 cases have been exported from Iran to 11 countries.”
On the other hand, the 329 new cases reported by China over the past 24 hours is the lowest figure in over a month.
More than 20 vaccines are in development globally and several therapeutics are in clinical trials. “We expect the first results in a few weeks,” Dr Tedros said.
UniCredit employee in Milan tests positive for coronavirus
Italian bank UniCredit confirmed that a Milan-based employee has tested positive for coronavirus and has been in self-quarantine since February 21 as he awaits conclusive test results.
On Monday, UniCredit contacted all employees who may have been in close contact with the individual and advised them to self-quarantine for 14 days and follow the advice of health authorities.
The bank said in a statement today that as of February 24, it introduced precautionary measures like temperature screening at building entrances, installed disinfection distributors and handed out masks and antibacterial gel.
The bank decided on Sunday to close the floor on which the employee worked, deep-cleaned and disinfected it. It remains off-limits “until further notice”.
Common areas in UniCredit’s bigger buildings in Milan and the vicinity will remain closed.
Vanguard website snarled by rush of customers logging on
Madison Darbyshire in London
Vanguard’s website has been slowed as its clients have rushed to log in amid the heavy market declines on Friday.
The low-cost fund provider — which houses many retirement accounts — said it was “experiencing higher-than-normal phone and web traffic given the steep declines in the global stock markets.”
Vanguard also confirmed that it experienced a two-minute web outage earlier in the day, but that clients were eventually able to log in to the site.
The group has been criticised in the past for experiencing frequent technical difficulties. Critics say that its technology has been unable to keep up with its rapid customer growth, which has stuttered during periods of market volatility as customers become more active.
“We are working to correct the reported connectivity issues, and thank clients for their patience at this time,” Vanguard said.
WHO’s increased risk assessment ‘not done to alarm or scare people’
Clive Cookson in London
Asked about the significance of raising the global risk assessment to very high, the top level on the World Health Organization’s scale, Michael Ryan, the UN body’s health emergencies director, said: “It does not make a legal difference but it does show that the risks are rising … It’s not done to alarm or scare people.
“This is a reality check for every government on the planet. Be ready – we can avoid the worst but our level of concern is at the highest level,” he continued.
Dr Ryan explained why the Covid-19 is not a pandemic, even though the risk of spread and impact is at the maximum level. “A pandemic is a unique situation in which we believe that all citizens on the planet will be exposed to the virus within a defined period of time,” he said.
“The data [for Covid-19] do not support that now. To declare a pandemic is unhelpful when you’re still trying to contain a disease. Declaring a pandemic means that you are giving up on trying to contain it and moving to mitigation.”
Dr Tedros Adhanom Ghebreyesus echoed his colleague’s sentiments. He said only 23 countries have reported more than one case of Covid-19 and several have shown that local outbreaks can be contained.
“We should not surrender into mitigation,” Dr Tedros said. “We need aggressive containment while preparing for any eventuality.”
Nigeria’s airport fever sensors failed to pick up country’s first Covid-19 case
David Pilling in London
The Italian man who on Friday became the first confirmed case of coronavirus in sub-Saharan Africa was not picked up by fever-sensors when he arrived in Lagos on a Turkish Airways flight earlier this week, the head of Nigeria’s National Centre for Disease Control said.
Chikwe Ihekweazu told the Financial Times the man had probably been asymptomatic when he arrived on Wednesday and that a form he filled out on arrival indicated he had not felt ill. The individual had probably developed symptoms soon afterwards, he said.
Dr Ihekweazu said a team of epidemiologists were working overtime to trace the contacts the patient had made before he sought medical care. That, he conceded, gave the virus a “window of opportunity” to spread, although he said that, because the patient had only mild symptoms, he had been able to provide lots of details about where he had been and with whom he had been in contact.
“Our absolute priority right now is containment and that is what we are concentrating on,” said Dr Ihekweazu , who added that Nigeria had developed a good contact-tracing system during the Ebola outbreak in west Africa in 2014.
That outbreak was quickly snuffed out in Nigeria, although it killed more than 11,000 people in three other west African countries. “We have outbreaks all the time. We are dealing with a large Lassa fever outbreak right now,” he said.
Still, Dr Ihekweazu acknowledged that, if the virus did start to spread quickly, there was only so much the stretched Nigerian health system could do. Unlike China, he said, it would not be possible to hospitalise everyone and health workers would need to concentrate their efforts on the elderly and those with underlying conditions.
“We are not overconfident,” he said, pointing out that even health systems in rich countries such as Italy had not been able to stop the virus from spreading. “If we do find a small cluster in the tens and maybe hundreds, we will be able to manage it,” he said. “But if we get into the thousands, we are in trouble.”
US bank stocks fall into bear market
Richard Henderson in New York
US bank stocks fell into a bear market on Friday as a global sell-off in the equity market spread around the globe.
The KBW bank index, one, the most widely tracked measures of the performance of the US banking sector, has dropped 20.7 per cent since reaching a peak in January.
Shares of the biggest US banks have lost ground since a wave of selling hit the US equity market, which is down more than 15 per cent from its high point reached last Wednesday.
In the last five trading days, Citigroup and Northern Trust have lost 17 per cent, Morgan Stanley is down 15 per cent and JPMorgan Chase, the world’s biggest bank by market capitalisation, has lost 14 per cent.
The drop in bank stocks comes as the Federal Depository Insurance Corporation revealed a 7 per cent drop in net income for more than 5,000 commercial banks in the US, driven by lower net interest income and higher expenses.
Kudlow appeals for calm, says sell-off has ‘gone too far’
James Politi in Washington
Donald Trump’s chief economic adviser appealed for calm in the face of a brutal market sell-off driven by fears of the expanding coronavirus outbreak, saying there was no need for “panic” and that the risk to the US remained “on the low side”.
“I don’t think people should panic…stocks look pretty cheap to me,” Mr Kudlow said from the White House on Friday morning. “It looks like the market has gone too far.”
Mr Kudlow, a former commentator on financial markets for CNBC, was this week added to Mr Trump’s coronavirus response task force, as concerns about the disease rattled investors around the world, creating a sudden and severe downturn in equity prices. Mr Kudlow has been a consistent cheerleader for higher share prices throughout Mr Trump’s presidency, including during market turmoil driven by the US trade war with China.
Earlier this week, Mr Kudlow had already attempted to reassure Americans that the impact of coronavirus would be limited, to little effect. “We have contained this, I won’t say airtight but pretty close to airtight,” he said.
Tougher health precautions revealed for big annual derivatives conference
Philip Stafford in London
FIA, the futures industry association, has issued tougher precautions ahead of its big annual derivatives conference in Boca Raton, Florida in mid-March.
The well-established event normally draws bosses of the world’s biggest exchanges, as well as policymakers, hedge funds, bankers and lawyers from all around the world.
FIA, the organiser, on Friday said it had asked individuals not to attend its 45th conference if they had travelled to or from mainland China, South Korea, Japan, Iran or Italy in the past 14 days, or had been in close contact with someone who had been to those countries.
It is also implementing a “no handshake or hug” policy aimed at minimising the threat of contagion. Face masks will also be available at the conference for delegates.
Intercontinental Exchange’s Jeff Sprecher, the London Stock Exchange Group’s David Schwimmer and Hong Kong Exchanges and Clearing’s Charles Li are set to appear at the event, as is Ken Griffin, the US hedge fund billionaire, the US’s chief agriculture negotiator Gregg Doud and Heath Tarbert, chairman of the Commodity Futures Trading Commission.
Wall St economist: ‘Pump the brakes on recession talk’
One Wall Street economist has cautioned against “pandemic panic”, saying the sell-off in stocks has been overdone.
Tom Porcelli, chief US economist at RBC Capital Markets, said he has no doubt the Fed is on the cusp of taking action amid market turmoil driven by coronavirus fears, but questioned whether “policy prescriptions” are the right measure to address a potential short-term supply shock.
“Even if it gets worse, unless you all of a sudden think we are looking at a 1918 Spanish Flu-like event, this too shall pass folks. And what do rate cuts at the front-end do exactly to shift the trajectory of the core short-term problems stemming from COVID-19? It boggles the mind,” Mr Porcelli wrote to clients.
Investors’ odds that the Fed will stand pat in March hit zero on Friday, with the market now split on whether the US central bank will cut rates by a quarter point or half point, according to CME Group’s FedWatch Tool, which tracks fed funds futures. Just one month ago, investors had placed an 80 per cent chance on the Fed holding its target range for the benchmark rate at 1.5 per cent to 1.75 per cent.
Oxford Economics expects the Fed to wait until the March meeting before acting, rather than make an emergency rate cut that could stoke more market volatility.
Larry Kudlow, Donald Trump’s top economic adviser, told reporters on Friday that the administration isn’t likely to make policy moves to boost the economy, noting that real-time surveys are “sending off good signals”.
RBC’s tracking of key economic metrics such as retail spending and jobless claims is at a “lofty 0.9 standard deviations from normal”, Mr Porcelli said. “So please, pump the brakes on recession talk.”
The Atlanta Fed’s GDPNow is estimating 2.6 per cent annualised growth in the US for the first quarter, compared with a high forecast this month of 2.9 per cent.
“To be sure, we sympathize with the narrative that some economic activity could be lost for good,” Mr Porcelli said. He added: “Even if we are looking at a supply shock where postponed activity does not fully get recaptured, it still does not warrant a [more than] 10% repricing in a market that is supposed to be forward looking in nature and ultimately realigns with fundamentals.”
Starbucks, which has reopened hundreds of restaurants in China and highlighted “early signs of a recovery”, offered another reason for optimism. “When trying to tease out the signal vs noise with regards to the news flow around COVID-19, we are inclined to give more credence to an entity with economic ‘skin in the game’ in the region,” Mr Porcelli said.
Precious metals join market sell-off
Henry Sanderson in London
Gold fell by 3 per cent, joining a deepening sell-off in global markets as investors sold the precious metal to meet margin calls on other assets.
The precious metal was on track for its biggest daily fall in almost seven years as precious metal palladium also sunk by 7 per cent.
Gold’s sudden reversal from a seven-year high on Monday highlights the severity of the market rout as investors look to meet margin calls on equities.
Gold is being sold “to generate liquidity and cover margins,” analysts at TD Securities said.
Shares in gold miners also sold off on Friday, with the VanEck Gold Miners ETF down by 6.5 per cent at $26.
The sell-off in palladium, a metal used in catalytic converters, ends a record-breaking 80 per cent rally in the metal over the past year. Palladium last traded down $227 at $2,622 an ounce. Gold last traded at $1,584 at troy ounce, down by $58.
UK travel agent says decline in demand has accelerated
Alice Hancock in London
On The Beach, the UK-based online travel agent, has warned that a “small but noticeable reduction in demand” when coronavirus was first reported has “accelerated significantly” as the outbreak has spread in Europe.
In an update to the London Stock Exchange, the travel group said that it now expected full-year results to be behind management expectations, citing the emergence of coronavirus in Tenerife as particularly damaging to trading.
“Whilst this reduction in demand has led to a natural reduction in marketing spend, the Board does not now expect the group to achieve payback in the current financial year on its previously outlined strategic marketing investment,” the company said.
Analysts at Citi said that they estimated a 1.5 per cent drop in profits for every 1 per cent fall in bookings, although On The Beach itself did not provide specific figures. Consensus forecasts had estimated full-year pre-tax profits for the group to £37.8m.
Lufthansa slashes short-haul flights as virus dents passenger demand
Tanya Powley in London
German airline group Lufthansa is slashing its short-haul flights by up to 25 per cent over the next few weeks as the coronavirus further hits passenger demand.
The carrier on Friday said it had also grounded more of its long-haul aircraft – to up to 23 from 13 – in response to the spreading of the deadly virus around the world.
Airlines in Europe have this week taken moves to freeze recruitment and investment in an emergency effort to protect profitability.
On Friday, both easyJet and IAG, which owns British Airways, announced plans to freeze hiring and reduce flights. Similar moves by Lufthansa and Dutch carrier KLM, part of the Air France-KLM group, were taken earlier this week.
The emergency measures come amid a sharp rise in infections outside China in recent days, with South Korea particularly badly hit along with Italy.
Lufthansa said: “As a result of the current situation caused by the accelerated spread of the coronavirus, the Lufthansa Group has decided on taking further measures to counteract the economic consequences. Within the coming weeks, the number of short- and medium-haul flights will be reduced by up to 25 percent, depending on the further development of the spread of the coronavirus.”
The carrier said it was still too early to estimate the financial impact of coronavirus.
Italy death toll climbs to 21
Miles Johnson in Rome
Four more people have died in Italy from the coronavirus, taking the total number of deaths since the outbreak began a week ago to 21.
The total number of infected has risen to 821 across the country, up from 650 on Thursday, according to official numbers.
Canadian and Mexican stocks remain under pressure
US stocks clawed back some of their declines from earlier in Friday’s session, but their neighbours to the north look to be in rougher shape.
Canada’s S&P/TSX Composite was down 2.8 per cent at lunchtime, back from a drop of as much as 4.9 per cent earlier this morning.
The Canadian benchmark has also fallen for six consecutive sessions – one fewer than Wall Street’s losing streak, and has shed 8.9 per cent since last Friday’s close.
The S&P/TSX Composite is down nearly 9 per cent for the month.
Elsewhere in North America, Mexico’s benchmark S&P/BMV IPC was down 1.6 per cent today for its ninth straight down day. Declines have hit 8.5 per cent for the week and 7.1 per cent for February.
Amazon tells employees to defer non-essential travel
Dave Lee in San Francisco
Amazon has told employees to defer any non-essential travel, including within the US.
“We’re asking employees to defer non-essential travel during this time,” an Amazon spokesperson said.
The company also announced it was withdrawing from this year’s Games Developer Conference, due to be held in San Francisco next month. The company said it had instead “decided to host a global online event, open to everyone, to showcase our planned content for GDC and more”.
A number of other companies, including Microsoft, have also pulled out of the conference. Organisers said they were “watching closely for new developments”.
San Francisco Mayor London Breed on Tuesday announced a state of emergency, a move she said would unlock funds to help contain the virus should it reach the city.
Mexico confirms first two cases of coronavirus
Jude Webber in Mexico City
Mexico said a second man had contracted Covid-19 after travelling to Italy after further tests confirmed an initial positive diagnosis.
The two men – one, a 35-year-old man in Mexico City, and the other, a 41-year-old man in Culiacán, in the northwestern state of Sinaloa –had both attended a convention in the northern Italian city of Bergamo. Both presented only mild symptoms, health authorities said.
The patient in Mexico City was being treated in hospital while the man in Culiacán was in quarantine in a hotel. Five relatives of the Mexico City patient were also in isolation at the National Respiratory Illness Institute.
Another man who had travelled with the patient in Sinaloa and had arrived by air on Thursday was also in quarantine in a separate room at the same hotel. Efrén Encinas, Sinaloa health secretary, told Milenio Television that the authorities were working to trace all the passengers on the plane “wherever they are”.
Two other men – one in State of Mexico and another in Mexico City – were under observation but displayed no symptoms. All had also been in direct contact with an Italian national living in Malaysia, who is currently in Bergamo and has symptoms of the virus, Mexico’s health ministry said.
Mexico has been warning people for weeks it was a question of when, not if, coronavirus arrived in Latin America’s second biggest economy. News of the two positive cases came a day after Brazil confirmed the first case in Latin America.
On Thursday, an Italian cruise ship docked in the Mexican Caribbean island of Cozumel after being turned away from Jamaica and the Cayman Islands on coronavirus fears. Hugo López-Gatell Ramírez, undersecretary for prevention and health promotion, said a crew member and one other person on board, who had reported respiratory difficulties, had been cleared of Covid-19. “It’s been completely ruled out,” he said.
The ship’s arrival had sparked angry scenes with some residents screaming at the ship not to disembark for fear of contagion but President Andrés Manuel López Obrador insisted that Mexico could not refuse the ship and needed to act “with humanity”.
One possible case, in the US border city of Tijuana, was still under investigation and authorities should have details during the day, the undersecretary said.
Mr López Obrador appealed at his morning news conference for calm.
“We have the doctors, specialists, capacity to deal with this case and as this develops we will attend to the cases. We are prepared,” he said.
He assured Mexicans that “it’s not something terrible, fatal, it’s not even equivalent influenza” and appealed for there to be “no exaggerations, no collective psychosis”.
US offers to aid Iranians in coronavirus response
The US has offered to aid Iranians in dealing with the country’s outbreak of the coronavirus.
Secretary of State Mike Pompeo said the offer was formally conveyed to Iran through the government of Switzerland.
“The United States calls on Iran to cooperate fully and transparently with international aid and health organisations. We will continue to work closely with countries in the region to help address unmet needs in response to the virus,” Mr Pompeo said in a statement.
Tourism fair in Berlin called off
Guy Chazan in Berlin
The ITB tourism fair in Berlin has been called off, the latest of a string of big international events that have been cancelled due to the coronavirus outbreak.
The fair was supposed to be held from March 4-8 in the German capital. But in the past few days, several participants had bowed out due to health fears.
The decision to cancel the fair came after local authorities in the Berlin district of Charlottenburg-Wilmersdorf insisted that participants must prove that they are not from risk areas or had had contact with people from risk areas. The ITB organisers said such restrictions “are not feasible”.
The ITB is one of the big events of the global tourism industry. Organisers, who were even a few days ago expressing confidence that the fair would go ahead as planned, had expected around 160,000 visitors.
But Horst Seehofer, Germany’s interior minister, said on Thursday in a newspaper interview that the ITB should be cancelled, since the risk of the coronavirus spreading was “incalculable”.
France confirms 19 new cases
Victor Mallet in Paris
France announced 19 new coronavirus cases on Friday, taking the total in the country since the end of January to 57.
”A new stage of the epidemic is under way,” said Olivier Véran, health minister.
The government of President Emmanuel Macron has convened an emergency ministerial meeting on Saturday to deal with the crisis.
Federal Reserve to ‘act as appropriate’ to support economy
Peter Wells in New York
The Federal Reserve issued a statement saying it is monitoring the spread of the coronavirus and will “act as appropriate” to support the US economy.
The US central bank said the fundamentals of the domestic economy were strong but the outbreak posed “evolving risks” to activity.
BofA expects Fed to deliver 50bp cut in March to stem ‘panic in markets’
Bank of America expects the Federal Reserve to deliver a 50 basis point rate cut at its March meeting “to stem the panic in markets and support economic sentiment”.
The economists outline three reasons for an easing by the Fed.
1. “What looked like just a supply shock from COVID-19 as a result of broken supply chains is now also becoming a demand shock.”
2. “Market movements have been sharp with a risk of becoming disorderly”. They add: “Fed easing could act as a ‘circuit breaker’ to stem a drop in market sentiment and fight against the perception of disorderly market conditions.”
3. “The Fed embraced ‘insurance’ cuts last year, laying the groundwork for continued easy policy. They made it very clear last year that the intention is to be proactive instead of reactive, especially given the proximity to the zero lower bound and the limited toolkit.”
Economists think an emergency cut by the Fed is possible, but policymakers would likely prefer to wait for more data before delivering a cut.
They also argue that if markets calm down prior to the meeting, the central bank could deliver a 25bp cut instead. However, they do not think markets will have stabilised enough for the Fed to sit pat.
Investors bet on half-point rate cut in March
A rare between-meetings statement from the Federal Reserve has tilted odds in favor of a half-point rate cut in March.
Investors have placed a 96 per cent chance on policymakers at the central bank cutting the benchmark rate by 50 basis points to a target range of 1 per cent to 1.25 per cent, according to CME Group’s FedWatch Tool, which tracks fed funds futures. It would be the first half-point move by the Fed since the 2008 financial crisis.
Earlier today, the market had been split on whether the Fed would cut rates by 25bp or 50bp next month. Just a week ago, traders put 89 per cent odds on the Fed standing pat.
The moves came after Fed chair Jay Powell issued a statement in which he said the coronavirus outbreak “poses evolving risks” to US economic activity. “We will use our tools and act as appropriate to support the economy,” he said.
The FedWatch Tool shows investors are looking for three rates cuts by the end of the year, bringing the Fed’s target rate down by a full percentage point.
Wall Street suffers biggest weekly drop since 2008
US stocks notched up their steepest weekly drop since financial crisis and the biggest monthly fall in 11 years on Friday, with the Federal Reserve’s pledge on Friday to “act as appropriate” to support the economy in the face of the coronavirus outbreak providing only a mild salve to investor nerves.
The S&P 500 closed 0.8 per cent lower today, rallying back from a drop of as much as 4.1 per cent . The benchmark index has shed 12.8 per cent in a seven-session losing streak since a peak on February 19, enough to put it in correction territory.
The index shed 11.5 per cent this week, the biggest weekly drop since October 2008, while the drop of 8.4 per cent for February was the biggest monthly drop since December 2018.
The Nasdaq Composite fought back to close in positive territory by less than a single index point, while the Dow Jones Industrial Average ruled off on a 1.4 per cent fall.
Investors plumped for the relative safety of government debt, driving yields to record lows. The yield on the benchmark 10-year US Treasury was down 13.6 basis points at 1.1633 per cent.
The Federal Reserve issued a statement on Friday afternoon saying it was monitoring the impact of the coronavirus and would “act as appropriate” to support the US economy.
Investors took their time to warm to the remarks from Fed chair Jay Powell, but the whippy trading has been symptomatic of the elevated levels of volatility in markets this week. The Cboe’s closely watched Vix index was at a two-year high of 40 on Friday afternoon, but had pushed to just short of 50 earlier in the day.
JPMorgan predicts global economy to shrink in first quarter
JPMorgan now expects the global economy to shrink in the first quarter, in light of the fallout from the coronavirus outbreak.
After previously slashing their growth forecast in half to 1.3 per cent on an annualised basis, economists at the bank estimated that global GDP will contract 0.1 per cent in the first three months of 2020 – driven mainly by a 3.9 per cent contraction in China. “If realized, this would be the first time global growth has stalled outside of a recession.”
From the start we had anticipated the outbreak to materially depress current quarter GDP but two recent developments point to an even larger than expected drag. First, our tracking of daily indicators suggest that the recovery in China is proceeding more slowly than expected and that a return to normal utilization rates in industry will be delayed until next month at the earliest. Second, the virus is now spreading to Western Europe and other parts of Asia in a manner than was more material than assumed. Contagion to the US also now looks inevitable, even if the relative magnitude of the spread is far from clear.
White House expects proposal from Congress for coronavirus fight funding
Courtney Weaver in Washington
The Trump administration expects to receive a bipartisan proposal from Congress by the beginning of next week that would authorise the release of additional funds to fight the coronavirus, the latest step the White House has taken to address the outbreak.
Speaking to reporters on Friday, US officials attempted to allay concerns over the disease, noting the administration had enough funding to fight the outbreak through April, while it waited for the release of additional funds from Congress – something that is likely to happen within the next two weeks, they said.
“We will spend whatever money Congress gives us to rapidly speed along the development of the bedside diagnostic,” Alex Azar, the US health and human services secretary, said.
He suggested it was unlikely the US would see contagion and fatality rates like what China’s Wuhan had seen in the early days of the crisis.
“What we don’t know is what kind of fatality rate we’ll see in a much more advanced public healthcare system that also has the early containment and mitigation efforts unlike in China where they had to play a bit of a catch-up there … we of course have the benefit of massive active containment measures as well as mitigation preparations.”
US companies continue to flag impact of virus
US multinationals including Monster Beverage, Lyft and casino operator Wynn Resorts issued updates on the impact the coronavirus was having on their businesses.
Monster Beverage said it and its suppliers currently source certain ingredients for its products from third-party manufacturers in Wuhan, the Chinese city at the centre of the outbreak, as well as other parts of China, and manufacture finished goods through third-party bottlers and co-packers. The company said the outbreak could “adversely affect our business” as a result of disruptions in the supply chain.
“Certain aspects of our operations currently in China may need to be moved, even temporarily, to other locations.” it added. Monster said the outbreak, as well as any travel restrictions, could adversely affect the growth of our business in China and affect demand for its products, which could weigh on the company’s results.
Wynn Resorts said visitors to Macau, the only place in Greater China where they are legal, had “fallen precipitously” since the outbreak of the virus. This had been driven by a combination of the Chinese government suspending its visa and group tour schemes to the former Portuguese colony, quarantines in certain mainland cities, and US restrictions on travel to the US from mainland China.
“A significant portion of our US business relies on the willingness and ability of premium international customers to travel to the US, including from mainland China. As such, our Las Vegas Operations and operations at Encore Boston Harbor may also be adversely impacted,” Wynn said in its 10-K on Friday.
Wynn said the virus outbreak would have “an adverse effect” on results of our operations and that it “cannot reasonably estimate the impact to our future results of operations, cash flows, or financial condition.”
Lyft said in its annual 10-K the outbreak had “led to production delays with respect to certain components of bikes and scooters, vehicles and automotive parts and components of autonomous vehicles, and may lead to further supply chain disruption or other business interruptions, decreased travel, including due to travel restrictions, or other precautionary measures.”
The ride hailing company added that its business, and therefore results, were subject to global economic conditions and any resulting effect on spending by the company or its riders.
In a broad-brush warning, it said that if “general economic conditions deteriorate” in the US or other markets “discretionary spending may decline and demand for ridesharing may be reduced” and that an economic downturn or prolonged recession “may have a further adverse effect on our revenue.”
Airbnb said it would offer hosts and guests affected by the outbreak the option of cancelling eligible reservations without charge.