Wuhan Coronavirus is Creating Fears in the Stock Market

January 27, 2020
682 Views

After an incredible run of success, American stock markets are facing a new and completely unpredicted challenge. It comes in the form of a new strain of Coronavirus, a disease that has parts of the Chinese mainland completely locked down with extreme containment efforts.

Transportation in seventeen cities is essentially shut down, affecting more than 50 million people in one of the most drastic anti-viral measures ever seen.

Wuhan is Ground Zero for Coronavirus

The Chinese city of Wuhan is home to 11 million people. It is also the city where the new form of Coronavirus was first detected last month. The official death toll is now 80, and 1,058 cases have been confirmed. Analysts believe that the number of infected could be much higher.

Unlike other viral pathogens, Coronavirus is contagious during the incubation stage, which lasts around 11 days before infection can be detected. This means that countless millions of people could have been exposed to the virus without displaying symptoms thus far.

Schools and businesses are closed, while train, bus, and plane transportation services are on hold. In total, more than 50 million Chinese citizens are affected by quarantine measures.

U.S. citizens are being advised to leave China if possible, while the U.S. Consulate in Wuhan is arranging evacuation for diplomats and some citizens. Other nations, including Japan and France, are arranging for evacuation of officials and citizens, who will be quarantined in their home nations.

Coronavirus has now been detected internationally, including in the United States, Japan, Australia, France, Canada, Malaysia, and Singapore. No specific cures are currently available, but work is underway to develop vaccines and treatments. The World Health Organization has declared that around 25% of those infected so far have experienced severe effects of the disease, which can include shortness of breath, respiratory distress, fever, and fatigue. Severe infection can cause kidney failure, pneumonia, and death.

Why Are American Investors Concerned?

China is the world’s largest manufacturing nation, and, despite recent tensions, it’s still the largest U.S. trading partner. The human effect of Coronavirus is devastating. For investors, there may also be consequences.

Chinese manufacturing provinces could be impacted by interruptions and shutdowns. This would lower economic output. The disease also has the potential to delay China’s delivery on its commitment to purchase more U.S. products and services as part of the recent Phase One Trade Deal.

Mass infections in international markets could also strain investor confidence, especially if Coronavirus spreads throughout the U.S. and Europe.

Asian markets performed poorly on Monday, sending a warning signal to U.S. equivalents.

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