Virus ripples through travel, energy, financial markets
AND BACK down goes the US stock market. The S&P 500 sank more than two per cent in early trading Thursday, and Treasury yields fell towards more record lows as the market swung back to fear about the effects of a fast-spreading virus.
Just a day earlier, stocks had soared, in part on hopes that more aggressive moves by governments and central banks around the world could help contain the economic fallout. Get used to such vicious swings, which will likely keep going as long as the number of new infections continues to accelerate, many analysts and professional investors say. The S&P 500 has had four straight days where it has lurched by at least two per cent in either direction, something that hasn’t happened since 2011.
In China, where the number of new infections has been slowing drastically, Shanghai-traded stocks have rallied nearly 12 per cent since hitting a bottom on February 3. They’re just 1.6 per cent away from wiping out the last of the losses they’ve sustained since the new virus began to spread late last year.
Factories in China are gradually reopening, and a return to a sense of normal life may even be on the horizon following swift and severe actions by the government to corral the virus.
But elsewhere in the world, the mood is much darker. There are about 17 times as many new infections outside China as in it, according to the World Health Organization. Widening outbreaks in South Korea, Italy and Iran are responsible for the majority of new infections.
In the travel sector, an industry group says the spreading coronavirus could cost airlines as much as US$113 billion in lost revenue. That figure, released Thursday, is four times the number released just two weeks ago by the International Air Transport Association, IATA, which is imploring governments for assistance. The group says the industry urgently needs help in waiving some requirements and fees.
The struggling British airline Flybe collapsed on Thursday as the outbreak quashed ticket sales. The British regional airline narrowly avoided bankruptcy in January, but the spread of the coronavirus sealed its fate.
Smaller carriers are particularly at risk. The low-cost carrier Norwegian Shuttle cancelled 22 long-haul flights between Europe and the United States from late March to early May. The national carrier Finnair is laying off its entire staff based in Finland for two weeks to a month due to the economic impact of the outbreak.
More companies are reporting workers with infections in the United States. Facebook says it’s temporarily closing a Seattle office after a worker was diagnosed with the virus. The last time the employee came to the social network’s Seattle office was February 21, so Facebook said the office will remain closed until Monday, when the incubation period ends. The company is heeding guidance from local authorities, however, and is encouraging Seattle staff to work from home until March 31.
Amazon this week said one of its employees in Seattle, and two in Milan, Italy, had contracted the coronavirus. All were quarantined.
In the energy market, the oilproducing countries of the OPEC cartel are considering slashing output to contain a price plunge intensified by the virus outbreak.
Air travel has plunged since the