China announced that Lunar New year holiday will be extended to February 3rd to try and keep virus from Spreading. Schools will be closed to February 10th and many Business also will be closed beyond the end of the New Year celebrations
Slowdown in China=Slowdown in Global growth/ no reflation =Reason for Risk Off! The Human toll is scary but markets, for now worried about the Economic Impact to China GDP, This lunar new year is similar in spending habits to U.S. Black Friday /Cyber Monday Holiday spending. Watch out for any comments that extended holiday closings or mentions of more factory closings that could cause another leg down in Risk
Other News of Note ;Missile attack at the U.S. Embassy in Bagdad where injuries are reported, German IFO business climate index Unexpectedly dropped and Bernie Sanders leading the Democratic filed also apply pressure to Risk
Stock markets are oof worse levels of day and Bonds off best level of day
Dow and Spoos -1.5%, Nasdaq -1.85%, Stoxx 50 -2%, Dax-2.2%. Bund yield down 4 bps and a bit of surprise Italian 10 year yields -18 bps due to positive local elections. U.S. Yield curve flatter two year yields -5 bps, 5s -6 bps, 7s and 10s -7 bps and 30 year yields -6.5 trading at 2.06%. All-time lows back in the conversation for Bonds.
Cl and Brent both down 3% CL -13% and Brent -11 % YTD Copper -2% looking at 8th consecutive lower close, lean Hogs offered limit down pre-open, Corn -1.8% Soybeans -1.25 wheat -1.44% and Cotton -1.6% all due to demand destruction worries.
The U.S. confirmed three more cases within 24 hours: two in Southern California and one in Maricopa County, Arizona. All patients had recently traveled to Wuhan, China, and are hospitalized. Their close contacts are being identified and monitored for signs that they may be developing the disease. Washington state and Chicago also confirmed infections (BBG)
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman Al-Saud said on Monday he was watching developments closely in China and said he felt confident that the new virus would be contained. Markets are being “primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand,” he said.(reuters)
World braces for economic impact of Wuhan virus outbreak- The 2003 outbreak of SARS, or severe acute respiratory syndrome, caused $18 billion in losses, pushing down the economic growth rate in East and Southeast Asia by 0.6 percentage point, according to an estimate by the Asian Development Bank. The economic toll was extremely large relative to the extent to which SARS actually spread, according to the bank.