The stock market opened lower and worsened as the spread of the coronavirus inside and outside of China may disrupt global economic growth. In recent days, clusters of infection have been seen in South Korea, Italy and Iran. Broadly speaking, the illness has had an impact on the flow of people, tourism, trade, supply chains and demand for commodities.
Chinese officials reported 508 new cases as on Monday, 24 February 2020, though the overall total in mainland China is nearly 77,658 infected, with 2,663 deaths. Also, the reports stated sharp increases in the number of cases in South Korea, Italy and Iran. Italy, which Moody's says will fall into recession this quarter because of the virus, has the largest known outbreak outside of Asia, with more than 200 confirmed cases and six deaths as of Monday. The South Korea, a critical link in the technology industry's pan-Asian supply chain, reported 60 new cases, bringing the number of infected cases to 893 and death toll of 8, and a lawmaker in Iran said the death toll from the city of Qom is 50.
Goldman Sachs on Monday cut its estimate for U.S. economic growth in the first quarter to just 1.2% from an original 1.4%, which would make it one the weakest three-month periods in Trump's presidency.
On last Saturday, the International Monetary Fund warned the virus outbreak could reduce global economic growth by 0.1% this year, and drag China's annual growth 0.4%age points lower than January estimates.
Economists at Standard Chartered Bank on last Friday estimated that COVID-19 epidemic could affect 30% of China's imports and 10% of its exports, prompting them to lower their gross domestic product forecast for China this year to 5.5% from 5.8%.
Factories around the world are grappling with parts shortages as their Chinese suppliers struggle to resume normal operations. With global economic engines sputtering, the Federal Reserve and other central banks facing face calls for emergency help.
Central banks across Asia have already been easing policy, while governments have promised large injections of fiscal stimulus, something western countries might also have to consider. But central bank chiefs may be ill equipped to battle the economic consequences of the flulike illness, which has prevented many Chinese workers from returning to their assembly lines and kept consumers shut at home instead of shopping.
Elsewhere, markets in Malaysia were watched on Tuesday following recent developments that thrust the country into political uncertainty. The country's Prime Minister Mahathir Mohamad unexpectedly resigned on Monday, but reportedly agreed to stay on as interim leader until a successor is named.
Shares of Fujifilm bucked the overall trend to surge more than 4% after reports that the Japanese government is considering the use of an anti-flu drug developed by a unit of the firm to treat the coronavirus.
CURRENCY & COMMODITY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, appreciated against a basket of currencies. The Japanese yen traded at 110.93 per dollar after strengthening from levels above 111.2 yesterday.
Crude-oil prices fell 5%, with West Texas Intermediate crude for April delivery settling 4.9% lower at $50.87 a barrel, while April Brent crude, the global benchmark, lost 5.5% to finish at $55.27 a barrel.
Gold prices surged by $27.80 an ounce, or 1.7%, to settle at $1,676.60, its highest finish in seven years.
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