By Geoffrey Smith
Investing.com -- The coronavirus has now killed more people than SARS, according to Chinese statistics that are coming under increasingly skeptical scrutiny. The U.K. declared a "serious and imminent" threat to public health. However, factories across China are cautiously reopening after an extended New Year holiday. The Australian dollar recovered from a decade-low in response. German Chancellor Angela Merkel needs a new succession strategy - and the studio behind Oscar winner 'Parasite' saw its stock surge nearly 20% in Seoul. Here's what's going on in financial markets on Monday, 10th February.
1. Coronavirus death toll tops SARS; U.K. declares crackdown
The death toll from the Chinese coronavirus outbreak hit 910, more than claimed by the SARS virus, after a weekend with no significant reduction in the rate of fatalities, and amid growing concern that the Chinese authorities may have under-reported both the incidence of new cases and of fatalities.
The World Health Organization, which had earlier praised China for its transparency, warned that what has been visible so far may only be “the tip of the iceberg.” Chinese state media reported one senior local scientist as saying that the incubation period could be as much as 24 days, rather than the 14 previous estimated.
The virus reached three European countries – France, Spain and the U.K. – just through one attendee at a business conference in Singapore in January, a development that illustrates how quickly so-called ‘superspreader’ events can transmit the disease. The U.K. declared the outbreak a "serious and imminent" threat to public health, a move that allows for forcible quarantining of suspected patients.
2. China returns to work, gradually
The virus continues to ripple through the world economy. Foxconn, which manufactures most of Apple’s iPhone at its Chinese factories, cautiously tried to restart production like many others on Monday, after an extended New Year holiday. However Nikkei reported that the authorities stopped at least one of its plants from reopening, due to contagion fears.
Many other factories remain closed or operating at reduced capacity. Kia Motors said it would shut all three of its plants in South Korea due to component shortages arising from disruption to its Chinese supply chain, while Bloomberg reported that BHP is in talks with Chinese customers to defer contracted deliveries of copper.
That echoes last week’s developments in the LNG market, where Chinese state buyers declared force majeure in order not to take delivery of contracted volumes of gas.
3. Stocks set to open mixed
U.S. stock markets are set to open mixed after weak signals from Chinese and European markets damped the appetite to push higher.
By 6:30 AM ET (1130 GMT), the Dow 30 futures contract was up two points, essentially unchanged, while the S&P 500 futures contract was up 0.1% and the Nasdaq 100 futures contract was up 0.2%.
The main U.S. indices had had their best week in nearly two months last week in response to liquidity injections in China and signs of still-robust U.S. economic growth. However, Chinese markets reacted badly to a spike in consumer inflation in January that was caused by coronavirus-related disruptions to food supplies, while European markets were spooked by a sharp drop in Italian industrial production and in the Sentix investor confidence index.
Today’s modest earnings roster is headed by Allergan (NYSE:AGN), Restaurant Brands and First Data Corp(NYSE:FDC), while Southern Copper reports after the bell.
4. Merkel's heir-apparent quits after far-right debacle
Angela Merkel’s heir apparent said she wouldn’t seek to lead her party into the next national elections, deepening the crisis in Germany’s ruling Christian Democrats and casting a big question mark over the political direction of Europe’s largest economy.
The center-right party, which runs a shaky coalition with the center-left Social Democrats at federal level, has been in turmoil since one of its regional parties formed an informal pact with the far-right Alternative fuer Deutschland party, breaking a 75-year tabu in German politics.
Annegret Kramp-Karrenbauer, who had been set to continue Merkel’s centrist course, had been unable to assert her authority over the Thueringia regional CDU. Her departure sets the stage for a debate over whether to continue with centrism, or to tack to the right to reclaim votes from the AfD.
5. Parasite's win sends Barunson soaring
Shares of Barunson Entertainment & Arts Corp (KQ:035620) rose 19% in Seoul after the company behind the movie ‘Parasite’ basked in the glory of winning the Best Picture Oscar at the 2020 Academy Awards.
Parasite – a low-budget Korean-language thriller - became the first foreign-language movie ever to take the prime award in over 80 years of the ceremony.
The stock has added nearly 50% since ‘Parasite’ received its nomination.