Coronavirus is back and scares investors

Coronavirus comes back and scares investors. Recent data on the prevalence of Hubei province — the epicenter of the disease, were stunning.

the day the number of cases increased by more than 13 thousand people, and this despite the fact that until now the maximum rise was less than three thousand. The reaction of the markets has not kept itself waiting. Asian venues have opened in the red.

While futures on the U.S. indices interrupted his unbridled rally. However, panic yet. The Chinese index Shanghai Composite decreases by 0.3%. Futures on the S&P 500 index — also in the red by 0.3%.

In commodity platforms oil prices lose over-half, but the gold is growing in price by two-tenths.

However, experts say, it is possible that sales will increase, because the negative impact of the virus on the economy of China may be more significant. The reason for the sharp increase of cases lies in the presentation of information by Chinese authorities.

February 7, China has changed the methodology of counting cases, and did not consider the list of new infected test positive for the virus, but without symptoms. This has created the impression that the authorities successfully cope with the epidemic.

However, apparently, now they’re back to the old method of calculation. What is particularly worth noting is the fact that the number of deaths due to the virus per day increased more than doubled to 242.

Returning to the subject of markets, it can be assumed that investors will come to the understanding of the fact that they have no real information about the virus and it can provoke a collapse in the markets. In addition, with each passing day it becomes increasingly clear that China will not be able to comply with the terms of the first part of a trade deal with the United States.

this been said, and officials. So, earlier similar opinion was expressed by adviser to the President for national security Mr. O’brien, on the eve of Finance Minister Stephen Mnuchin.

“of Course, oure most attention is focused on the implementation of the first phase. As expected, this is to some extent slowed because of the virus,” he said, speaking at a hearing in the Finance Committee of the Senate of the U.S. Congress.

the Minister also assured that American business is the first stage of the transaction is extremely important.

“I think the first phase of the agreement is very important. First we are talking about serious commitments from China concerning an issue of forced technology transfer, patent protection, structural agricultural issues, problems of financial services, currency, as well as genuine verification measures,” reports his words TASS.

In fact, from the collapse of world markets in the current situation hold only the huge liquidity injections by major Central Bank. The fed, ECB, people’s Bank of China and Bank of Japan simultaneously print money and pour them any beginnings of a fire on the exchanges.

the head of the Federal reserve system of the United States Steven Mnuchin spoke in front of Congress, where in fact he stated that the regulator can launch full-fledged QE program.

He noted that low interest rates are no longer a choice. In other words, he made it clear that any increase in rates will lead to financial instability, if not outright disaster, and it means that the fed has become a hostage of low rates.