Selling pressure on global stock markets eased on Tuesday despite further evidence of the global spread of the coronavirus and warnings by Italy and Japan on the impact of the outbreak. Futures trading indicated Wall Street was expected to nudge higher at the open after the S&P 500 dropped 3.4 per cent on Monday, erasing all its gains for the year in its biggest slide since trade tensions rattled markets in February 2018.
This helped trim heavy losses in Europe where the Stoxx Europe 600 fell as much as 1.1 per cent in early trade before the losses were pared to 0.6 per cent. Stocks in Italy, the hardest hit country in Europe from the coronavirus, swung sharply through the trading day and were down 0.2 per cent by the early afternoon, extending losses this week to 5.5 per cent. London’s FTSE 100 fell to its lowest level since October as it slipped 0.7 per cent. The firmer tone expected on Wall Street came despite concerns over the wider disruption caused by the coronavirus, including restrictions on how companies operate to the breakdown of some global supply chains.
The virus is now likely to weigh on global growth this year, said Robert Bergqvist, chief economist at Nordic Bank SEB. “In contrast to most other types of risks and crises that have popped up in recent years, the coronavirus is having direct economic consequences,” he said. Japan earlier urged companies to adopt remote working, stagger shifts and hold online meetings to reduce the spread of the illness in the country. An expert government panel said there had been 146 infections confirmed in more than 16 different prefectures, excluding cases from an infected cruise ship and Japanese evacuees from China. “We are at the crossroads,” Shigeru Omi, head of the Japan Community Health Care Organization, said at a press briefing. “Local transmission is already going on.”
Prime minister Shinzo Abe asked companies to adopt the new strategy after his cabinet on Tuesday approved a new antivirus plan. Italy warned that the EU should offer flexibility on its budget targets should the country’s sudden coronavirus outbreak in its industrialised northern regions have a prolonged impact on an economy already teetering on edge of a recession. On Monday, a seventh Italian died from the virus and the infection count rose to 220. The majority of cases were clustered in the regions of Lombardy and Veneto, which together make up a third of output for the eurozone’s third-largest economy and about half of its exports. Globally, the number of confirmed cases jumped to more than 80,000 on Tuesday, with 2,699 deaths.
The Austrian province of Tyrol has confirmed the country’s first cases of coronavirus. In Iran, health officials said 15 people had died in the country and 95 had tested positive for the disease, the highest number of coronavirus deaths outside of China. The high mortality rate has sparked concerns that Iran is struggling to contain the outbreak and prompted neighbouring countries to impose border restrictions. Among the infected is Iran’s deputy health minister, the semi-official news agency ILNA reported on Tuesday
The spike in cases in South Korea, where authorities say nine people have died and there have been 893 confirmed infections, prompted officials in Washington and Seoul to consider scaling back joint military exercises. US officials also raised the travel warning to South Korea to its highest level, warning Americans against all but essential travel to the country. Read more about the coronavirus impact The latest figures as the outbreak spreads How far will it spread? What does coronavirus do if you catch it?
The expert panel in Japan recommended changing its strategy of keeping the infection out altogether to containing it and slowing its spread. It no longer made sense to test everybody who might have been exposed to the virus, they said, as doing so would overwhelm the healthcare system.
Instead, Japan was asking anybody who felt ill to isolate themselves and said they should only seek medical help if they suffered severe symptoms. “The biggest objective of our response from this point should be to control the speed of the infection’s spread and minimise the number of deaths and people with severe symptoms,” the panel said. It also said that the next one to two weeks would be decisive in preventing the spread of the virus.