Coronavirus fallout: Market impact and effect on gold price - LIVE UPDATES
(Kitco News) Coronavirus fears started to fade this week with the number of new cases slowing.
The coronavirus outbreak has now reached more than 31,000 confirmed cases and at least 636 deaths worldwide.
Stocks sold off Friday on fears that the coronavirus will have a big impact on China's economy. The Dow dropped 300 points, followed by the S&P 500 and the Nasdaq - both trading down 0.6%. Earlier in the week, all three major American stock indexes hit record highs.
Gold retreated this week but saw a small rally on Friday. April Comex gold futures were trading at $1,575.10 an ounce, up 0.32% on the day, on Friday afternoon.
China’s economy will be hit the most, but a broader economic impact is not ruled out, economists said.
Coronavirus news will continue to drive the gold market next week, said Capital Economics chief commodities economist Caroline Bain.
"Whatever news we get on the virus will determine the direction of the price. In the last couple of days, the number of infections has been lower. Potentially, we are looking at something that can be brought under control fairly quickly," Bain said. "If that were the case, I could see gold falling back."
JPMorgan cut its China's Q1 GDP forecast to 1%. Many other analysts are anxiously waiting to see how China's production will be impacted.
"We've got Chinese production closed for a week at the moment. And if that was extended, it would begin to cause more damage, particularly through global supply chains. At the moment, it appears to be fairly limited," Capital Economics chief U.S. economist Paul Ashworth told Kitco News on Friday.
Goldman Sachs said late last week that the impact on the U.S. economy could be a 0.4% slowdown of U.S. annualized growth in Q1. “The drag on growth operates mostly through lower tourism from China and lower U.S. goods exports to China,” the report said.
As markets continue to digest the impact of the coronavirus, a lot of uncertainty remains. Media outlets are keeping live updates of the spread of the coronavirus as well as its broader impact on the economy.
Sets of LIVE UPDATES to follow:
• WHO director-general Tedros Adhanom Ghebreyesus confirmed on Friday that the number of new cases is slowing.
• The Federal Reserve flagged the coronavirus as a potential threat to the U.S. economic growth in its latest monetary policy report to Congress released on Friday.
• Vice President Mike Pence told CNBC News on Friday that Beijing has demonstrated “an unprecedented level of transparency” with world health officials.
• The White House’s economic adviser Larry Kudlow told reporters on Friday that the White House does not expect the coronavirus to have a major effect on the U.S. economy. “There’s a lot of variables involved and things we don’t know. Internally we have looked at a drop in GDP of perhaps two-tenths of 1% — that’s all we found so far. Again, based on the past and based on what we’re seeing,” he said.
34-yr-old Dr. Li Wenliang was jailed in #Wuhan after he posted a social media warning that patients he'd seen "looked like #SARS" on Dec30.— Laurie Garrett (@Laurie_Garrett) February 6, 2020
Once released, the heroic doctor came down w/#2019nCoV
Now, tragically, he has died.https://t.co/QFngp2paf9
LA TOURISM: Los Angeles could see a drop of 325,000 Chinese visitors because of the coronavirus outbreak, which would translate into a $921 million hit to the local economy. https://t.co/wT5bgZSrlG pic.twitter.com/BPWmhgAHaf— CBS Los Angeles (@CBSLA) February 7, 2020
Q: Is it safe to receive a letter or a package from China?— World Health Organization (WHO) (@WHO) February 1, 2020
A: Yes, it is safe. People receiving packages from China are not at risk of contracting #2019nCoV.
From previous analysis, we know coronaviruses do not survive long on objects, such as letters or packages.#KnowTheFacts pic.twitter.com/RBBqjkd5JQ
Chinese oil demand has dropped by about three million barrels a day, or 20% of total consumption, as the coronavirus squeezes the economy: sources https://t.co/b4EUK5YAJ3— Lisa Abramowicz (@lisaabramowicz1) February 3, 2020
China's coronavirus is rippling through the global economy and the world is quickly learning how much it depends on China. Factories are idled, supply chains gummed up. Tour operators are reeling, policymakers from Bangkok and Tokyo are bracing for a blow https://t.co/CFsS434jOQ— Alexandra Stevenson (@jotted) January 29, 2020
UBS slashes global growth forecasts on #coronavirus . China from +6.5% qoq to -1.5%, Thailand, Singapore, HK all close to -9% annualised. Asia's weight in global economy nearly double its weight under SARS.— Paul McNamara (@M_PaulMcNamara) February 3, 2020