· CORONAVIRUS UPDATE:
Coronavirus live updates: Death toll in China hits 490, as confirmed cases cross 24,000
China National Health Commission said that as of Tuesday night, a total of 24,324 cases have been confirmed and 490 people have died in the country.
There were 65 additional deaths and all of them came from Hubei province, the epicenter of the outbreak.
Hubei province reports an additional 65 deaths and 3,156 new cases related to the mysterious coronavirus as of the end of Tuesday.
The Hubei Provincial Health Committee on Wednesday reported that 479 people have died and a total of 16,678 cases have been confirmed so far. To date, the province — the epicenter of the pneumonia-like virus — has accounted for most of the deaths from the new coronavirus.
- Ex-Fed chair Janet Yellen: Coronavirus poses ‘risk’ to global economy, but previous epidemics had little influence
The coronavirus has killed over 420 people and infected more than 20,000 in more than two dozen countries, leaving global leaders scrambling to mitigate the effects of the epidemics not only on their citizens but also on the global economy.
Former Federal Reserve chair Janet Yellen said during a Feb. 4 talk at George Washington University that while she sees the coronavirus posing a risk to the global economy, similar past epidemics only had modest long-term effects.
- Infectious disease specialists and scientists say the new coronavirus that’s shuttering companies across mainland China may be more contagious than current data shows.
Emerging in Wuhan, China, about a month ago, the virus has spread from about 300 people as of Jan. 21 to close to 21,000 and killed more than 420 — with the number of new cases growing by the thousands every day.
- Coronavirus damages China’s auto industry
The extended factory shutdown in China is costing automakers that have idled plants as the government grapples with a worsening virus outbreak that has already claimed more than 420 lives. Automotive research firm IHS Markit expects automakers to lose about 350,000 units of vehicle production in the first quarter as local Chinese governments keep plants closed to keep the new coronavirus from spreading. If the plants remain closed until mid-March, as some industry analysts have speculated, IHS forecasts lost production of more than 1.7 million units for the first quarter a roughly 32.3% decline from its initial expectations before the virus emerged.
- Coronavirus could easily tip China into a technical recession, economist warns
China could easily enter a technical recession as the country’s coronavirus outbreak weighs on growth, an economist told CNBC Tuesday.
Speaking to CNBC’s “Street Signs,” Diana Choyleva, chief economist at Enodo Economics, said the virus had come at “a very bad time for China.”
“Not only has growth slowed down significantly in the second half of last year, but this year was going to be the crunch time for trying to sort out China’s very large bad debt problem,” she explained.
Choyleva said that based on Enodo’s estimates, credit losses arising from the Chinese coronavirus were likely to amount to 20% of the country’s gross domestic product (GDP). She also noted that the shutdown of the Hubei province — where the virus was first reported — was “unprecedented” and “severe.”
- China’s yearly growth rate could fall below 2%, economist warns
China’s economy could grow by less than 2% year-over-year, according to Pantheon Macroeconomics Chief Asia Economist Freya Beamish.
China said at the end of Monday that cases of the new coronavirus on the mainland have now surpassed 20,400 with a total of 425 deaths.
The spread of the virus has sparked concern over the potential fallout for the world’s second-largest economy, with businesses beginning to feel the impact from falling demand and the shutdown of huge swathes of the country.
- China virus to delay U.S. export surge from trade deal: White House adviser
The White House’s top economic adviser said on Tuesday that China’s coronavirus would delay a surge in U.S. exports to China expected from the Phase 1 trade deal set to take effect later this month.
Larry Kudlow, in an interview with Fox Business Network, said the virus, which has virtually shut down many Chinese factories and cities and cut off much travel in and out of China, would not have a catastrophic effect on business supply chains.
His comments marked the first time a Trump administration official has said the fast-spreading virus would hamper China’s ability to increase purchases of U.S. goods and services by $200 billion over two years, at least in the near term.
“It is true the trade deal, the Phase 1 trade deal, the export boom from that trade deal will take longer because of the Chinese virus,” Kudlow said.
The Phase 1 agreement, signed on Jan. 15 and taking effect on Feb. 15, suspended a new round of U.S. tariffs in exchange for the Chinese purchases of agricultural, energy and manufactured goods and services. It also included reforms aimed at improving intellectual property rights and curbing the forced transfer of American technology to Chinese companies.
- Disney said it is expecting to take a $175 million hit from the recent coronavirus outbreak if its Hong Kong and Shanghai Disney parks remain closed for two months. Christine McCarthy, chief financial officer at Disney, said the company expects an impact of $135 million on second-quarter operating income from the Shanghai park and about $40 million from the closure of the Hong Kong park.
- Nike has closed half of its stores in China, saying the outbreak will have a “material impact” on its operations there. “This situation was not contemplated at the time we provided Q3 guidance during our Q2 fiscal year2020 earnings call,” the company said in a statement. “Dynamics continue to evolve and accordingly we will provide an update on the operational and financial impacts on our Q3 earnings call.”
· Safe-haven yen, Swiss franc slide for 2nd day as risk appetite grows
The safe-haven yen and Swiss franc fell for a second straight session against the U.S. dollar on Tuesday, with risk appetite growing as investors were encouraged that the Chinese government was taking measures to contain the coronavirus and limit its economic fallout.
In late morning trading, the dollar rose 0.5% against the yen to 109.26 yen, and gained 0.3% versus the Swiss franc to 0.9690 franc.
Gains against the yen and franc helped push the dollar index higher to 97.922, up 0.1% on the day. In U.S. politics, Democratic Party officials blamed “inconsistencies” for an indefinite delay in Iowa’s caucus results.
A victory by left-leaning Bernie Sanders or Elizabeth Warren could hurt shares and boost safe-haven currencies. The euro, meanwhile, slipped 0.1% against the dollar to $1.1040.
The Australian dollar rose 0.5% to US$0.67285, pulling away from a 10 1/2-year low of $0.6670 touched last October, after the Reserve Bank of Australia left its main cash rate unchanged at 0.75%.
The offshore yuan rose against the dollar, which fell 0.3% to 6.9935.
· A Bernie Sanders presidency would present ‘one of the key risks for markets’ in 2020: UBP
Even the possibility of Sen. Bernie Sanders winning the Democratic nomination for the 2020 elections is an important risk for markets this year, a chief investment officer told CNBC this week.
Sanders last year unveiled a plan to reverse President Donald Trump’s tax cuts for businesses and increase the corporate tax rate to 35%, up from 21%.
“We think a Bernie Sanders presidency or even the prospect that he wins the nomination probably presents one of the key risks for markets as we move through 2020,” said Norman Villamin, CIO of wealth management at Union Bancaire Privee.
“That’s largely because what you’re going to see is, the market will have to price the prospect of rising tax rates or a reversal of the tax cuts we saw in 2018,” he told CNBC’s “Capital Connection” on Tuesday.
“That will be a rather major hit to earnings if the market needs to anticipate that,” he added.
· Defense aircraft demand lifts U.S. factory orders; underlying softness remains
New orders for U.S.-made goods increased by the most in nearly 1-1/2 years in December, flattered by robust demand for defense aircraft, but persistently weak business spending on equipment pointed to limited scope for a sharp rebound in manufacturing.
Factory goods orders surged 1.8% in December, the largest gain since August 2018. Data for November was revised down to show orders tumbling 1.2% instead of dropping 0.7% as previously reported. Excluding defense, factory orders dropped 0.6% in December after edging up 0.1% in the prior month.
Economists polled by Reuters had forecast factory orders would increase 1.2% in December.
Factory orders fell 0.6% in 2019. While business sentiment has improved as trade tensions between the United States and China have eased, confidence remains subdued. Washington and Beijing signed a Phase 1 trade deal last month, but U.S. tariffs on $360 billion of Chinese imports, about two-thirds of the total, remained in place.
Underlying weakness in manufacturing was underscored by a 0.5% jump in inventories at factories in December. That was the biggest increase in factory inventories since last January and followed a 0.3% rise in November.
· Oil drops 1% to settle below $50 for first time in more than a year
Oil prices moved lower Tuesday as fears that energy demand would take a long-term hit from the coronavirus outbreak offset prospects for more cuts in crude production from OPEC and its allies.
Brent crude lost 44 cents to trade at $54.01 per barrel, while U.S. West Texas Intermediate crude shed 1% to settle at $49.61 per barrel.
Reference: CNBC, Reuters
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