The World Health Organization declared the coronavirus a “Public Health Emergency of International Concern.” Despite that declaration late last week, the markets have largely shrugged off the outbreak. Chinese stocks are struggling, but U.S. stock indices are off to the races this morning.
Analysts have highlighted some bright areas of news in the headlines about the coronavirus.
The number of total coronavirus cases in the world surpassed 17,200, climbing almost 20% in just the last 24 hours alone. Meanwhile, the death toll rose to 361 today, putting the mortality rate of the illness at around 2%. Ninety-nine percent of the new cases of the virus continue to be in China, although the number of cases outside China has risen to about 180, with some reported in at least 25 countries around the globe.
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The Philippines was the first country other than China to report a death from the coronavirus. Tests on suspected cases are still pending, so the number of confirmed cases will continue to increase.
In its statement declaring the coronavirus a public health emergency, the WHO said restricting the flow of people and goods during such an emergency may not work very well and could “divert resources from other interventions.
“Further, restrictions may interrupt needed aid and technical support, may disrupt businesses, and may have negative effects on the economies of countries affected by the emergencies.”
However, the agency went on to add that in some cases, restricting people’s movements may be helpful on a temporary basis, like in areas where the response capabilities are limited or where transmissions among “vulnerable” populations are of particularly high intensity.
“In such situations, countries should perform risk and cost-benefit analyses before implementing such restrictions to assess whether the benefits would outweigh the drawbacks,” the WHO stated.
In a report this morning, Cowen analysts highlighted a number of points about the coronavirus public health emergency that the global markets may have picked up on. The Dow Jones Industrial Average, S&P 500 and NASDAQ Composite all rallied more than 1% in early trading this morning, even as Chinese stocks declined.
Cowen analysts pointed out that the number of suspected new cases outside Hubei province is still relatively small. The epicenter of the outbreak was Wuhan, which is located in Hubei province. They report that about 40% of the suspected new cases are reported to be outside the province, while the other 60% are in Hubei province.
Additionally, the number of confirmed cases outside the province slowed over the weekend. The markets may be taking that as good news, although the Cowen team notes that it could be partially because of a bigger lag in processing test results.
It’s still too early to know if the worst of the coronavirus outbreak is over, although Cowen analysts describe the latest data from the weekend as “incrementally positive” because the number of suspected new cases didn’t rise significantly over 5,000. Additionally, there haven’t been any major international outbreaks, although they also note that outbreaks typically come in waves. Thus, there could still be a major outbreak in another country that’s yet to come.
Like many other analysts, Cowen also compared the market’s movement around the coronavirus to the movements during the SARS outbreak. However, they also feel that the U.S. invasion of Iraq in 2003 overshadowed most of the concerns about the SARS outbreak. Further, the economy is in a different position now than it was then. At the time of the SARS outbreak, the economy was in the early stages of an economic expansion, and now, the economy is in the late stages.