The Coronavirus has done little to slow American investment markets in 2020, but that could change today, at least in the early hours of the trading session. U.S. futures are currently down, following news that Coronavirus cases have spiked in Mainland China.
As the world begins to realize the true economic cost of the deadly virus, the global economy could take a hit.
Chinese Coronavirus Cases Spike
China announced 254 new deaths from the Coronavirus on Thursday, as well as 15,152 newly detected cases. The reports all came from Hubei province, considered to be ground zero for the virus.
The total deaths are now at 1,366, with confirmed cases at 59,841. While the majority of cases are in China, there have been pockets of activity around the world, including in the United States, Japan, and parts of Europe.
The new numbers are concerning, but it’s also important to note that the Chinese government is using a new methodology when reporting infections. This could artificially sway the numbers and create a higher level of panic and market disruption than is necessary.
China expanded its detection criteria to include patients who showed possible symptoms of the virus and who were diagnosed through CT scans of the lungs. However, the virus in these cases has not been confirmed by laboratory testing.
Up until now, all cases were confirmed with lab results. More than 99% of all known Coronavirus cases have been detected in China. Only 441 cases have been confirmed outside of its borders.
Why are U.S. Market Futures Down?
Coronavirus has not taken hold in America, with only 14 cases confirmed so far, and no deaths reported. However, investors are concerned that China’s economic slowdown in relation to the virus will have a knock-on effect.
China is the world’s largest manufacturer, and many of the products sold by American companies are made there. With major factories closed, trade and commerce could be disrupted.
In France, the Economic Minister said this week that the cost to the global economy could be as high as 1% once the Coronavirus is contained.
Will This Derail the Bull Market?
American investors have enjoyed a strong bull market in 2020. Stocks are up across the board, and major indexes have posted significant gains. With futures down, there could be volatility this Thursday.
Beyond today’s news, American fundamentals are strong and the economy is expanding. It must be reiterated that Coronavirus is a major global health concern and an economic one, too. However, its likelihood of permanently harming American market growth is still very unlikely.
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