· Deaths from China’s new virus rose to 17 on Wednesday with more than 540 cases confirmed, increasing fears of contagion from an infection suspected to originate from illegally-traded wildlife.
The previously unknown, flu-like coronavirus strain is believed to have emerged from an animal market in central Wuhan city, with cases now detected as far away as the United States.
Contrasting with its secrecy over the 2002-03 Severe Acute Respiratory Syndrome (SARS) that killed nearly 800 people, China’s communist government has this time given regular updates to try to avoid panic as millions travel for the Lunar New Year.
· Government officials in Wuhan, China are suspending all public transportation, including buses, trains, airplanes and ferries, to better combat the coronavirus outbreak, Reuters reported Wednesday, citing Chinese state media.
Officials are also asking citizens not to leave the city unless there are special circumstances. Additionally, people in public places will be required to wear masks to prevent exposure to the illness, local officials said.
· Asian currencies could be hit by coronavirus fears as uncertainty lingers
Growing concerns over the outbreak of a mysterious pneumonia-like virus in China, which has killed 9 and infected hundreds more, has impacted currency markets and pushed the Chinese yuan lower.
“It is starting to have an impact … on financial markets over the past 24 to 48 hours,” Adarsh Sinha, co-head of Asia rates and foreign exchange strategy at the Bank of America Securities told CNBC’s “Street Signs” on Wednesday.
On Tuesday, the Japanese yen — often seen as a safe-haven in times of economic uncertainty — strengthened sharply against the dollar to levels below 109.8. It last traded at 110.01.
Meanwhile, both the onshore and offshore Chinese yuan have seen a steep weakening against the greenback and last traded at 6.902 and 6.9036, respectively. The yuan saw levels below 6.86 earlier in the trading week.
So far, more than 400 cases have been confirmed by public healthcare officials, with the bulk of them coming from China. Cases have also been confirmed in Thailand, South Korea, Japan and Taiwan.
“SARS had a significant impact on Asia (foreign exchange), rates and equities from the point at which infections were officially identified by the World Health Organisation in February 2003 to the peak of new daily infections (23 April 2003),” analysts at Nomura wrote in a report dated January 21.
In particular, Nomura said the Korean won and Singapore dollar sold off broadly against the dollar at that time. The South Korean currency was last at 1163.99 per dollar while the Singapore dollar traded at 1.3497 against the greenback.
“Under similar conditions, we would expect a similar behavior, with most of the pressure concentrated on (the Korean won) and (Chinese yuan),” the analysts said. “If infections become region-wide, the rest of Asia would likely suffer, especially (the Singapore dollar) and (Thai baht).”
· The yuan dipped and the Australian dollar hit a six-week low on Wednesday as investors feared the outbreak of a new coronavirus in China could create more headaches for the Chinese economy, which is already slowing because of the U.S.-China trade war.
The virus, which causes a type of pneumonia, has spread to cities including Beijing and Shanghai as the number of patients in China more than tripled. More cases were also reported outside China, including the United States.
The yuan was steady after dipping earlier. It fell about 0.55% on Tuesday,its biggest decline in almost five months, in the onshore trade. It last stood at 6.9063 per dollar, almost flat on the day.
The Australian dollar, often used as a proxy bet on the Chinese economy, fell to as low as $0.6827, a trough last seen in mid-December, and last stood at $0.6837, down 0.13%.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 97.527 after seeing earlier highs above 97.65.
· The initial trade deal between Washington and Beijing is unlikely to provide a significant boost to the U.S. economy and will only reduce the downside risk or at best help activity moderately, a Reuters poll showed.
The Jan. 16-22 Reuters poll of over 100 economists - taken as business leaders gathered at the World Economic Forum in Davos to be greeted by the IMF cutting its global growth forecasts again - showed a significant pickup in the U.S. economy was not on the cards.
“The recent Phase 1 deal between the U.S. and China suggests decreasing odds of an escalation to a full-blown trade war. However, the deal so far is not comprehensive enough to significantly boost economic momentum,” said Janwillem Acket, chief economist at Julius Baer.
That was also clear from predictions for the Federal Reserve to remain on the sidelines this year and on expectations the next likely move would be a cut rather than a hike.
· The United States is moving to add more countries to its travel ban list, U.S. President Donald Trump said on Wednesday without giving details but saying the changes would be announced soon.
A source familiar with the draft proposal said the tentative list of nations included Belarus, Eritrea, Kyrgyzstan, Myanmar, Nigeria, Sudan and Tanzania.
The move could dampen relations between the United States and the countries affected under the expanded ban.
· Democrats accused President Donald Trump at his impeachment trial on Wednesday of a corrupt scheme to pressure Ukraine to help him get re-elected and warned that America’s global prestige would suffer if the U.S. Senate acquits him.
The Republican Trump sounded a defiant note, telling reporters in Switzerland the Democrats did not have enough evidence to find him guilty and remove him from office.
· A bipartisan majority of Americans want to see new witnesses testify in the impeachment trial of President Donald Trump, and the public appears to be largely following the proceedings even after a bruising congressional inquiry that lasted several months, according to Reuters/Ipsos polling released Wednesday.
The poll, which ran from Jan. 17-22, also showed that U.S. public opinion has moved little since the U.S. House of Representatives impeached Trump in mid-December.
About 44% of adults in the United States say Trump should be removed from office, another 15% say he should be reprimanded formally with a congressional censure, and 31% said the charges should be dismissed.
· ECB to launch review that will redefine its mission and tools
European Central Bank President Christine Lagarde is set to launch a broad review of its policy on Thursday that is likely to see her redefine the ECB’s main goal and how to achieve it.
The euro zone’s central bank has fallen short of its inflation target of just under 2% for years despite increasingly aggressive stimulus measures under Lagarde’s predecessor, Mario Draghi.
ECB rate-setters are not expected to make any policy change this week but simply stand by their pledge to keep buying bonds and, if needed, cut interest rates until price growth in the euro zone heads back to their goal.
· Britain moved a step closer to its Jan. 31 exit from the European Union when the legislation required to ratify its deal with Brussels passed its final stage in parliament on Wednesday.
The bill will officially become law when it receives Royal Assent from Queen Elizabeth, something that could happen as soon as Thursday.
“At times it felt like we would never cross the Brexit finish line, but we’ve done it,” Prime Minister Boris Johnson said in a statement.
“Parliament has passed the Withdrawal Agreement Bill, meaning we will leave the EU on 31 January and move forwards as one United Kingdom.”
Earlier on Wednesday, the lower house of parliament, the House of Commons overturned changes the upper house, the House of Lords, had made to the legislation, including a clause to ensure protections for child refugees after Brexit.
· Facing economic crisis, Lebanon's government weighs options
Lebanon’s Hezbollah-backed government will be walking a political tightrope as it looks to secure urgent foreign funding to ward off financial collapse, and it may look to the International Monetary Fund for assistance.
Lebanon, burdened with a public debt equivalent to about 150% of GDP, won pledges exceeding $11 billion at an international conference in 2018 conditional on reforms that it has so far failed to implement.
“Your mission is delicate,” Aoun’s office cited him as telling the cabinet. “It is necessary to work to tackle the economic situation, restore the confidence of the international community in Lebanese institutions and reassure the Lebanese about their future.”
· Japan December exports fall 6.3% year/year: MOF
Japan’s exports fell 6.3% in December from a year earlier, Ministry of Finance (MOF) data showed on Thursday, in a sign weak external demand is keeping a lid on the export-reliant economy.
· Oil prices fell more than 2% on Wednesday as a market surplus forecast by the International Energy Agency (IEA) and demand worries outweighed concern over disruptions to Libya’s crude output.
Brent crude was down $1.39, or 2.2%, at $63.20 per barrel. U.S. West Texas Intermediate crude fell 2.8%, or $1.64, to settle at $56.74 per barrel.
The head of the IEA, Fatih Birol, said he expects the market to be in surplus by 1 million barrels per day (bpd) in the first half of this year.
Reference: Reuters, CNBC
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