The Chinese coronavirus outbreak continues to dominate news flows. The latest figure released over the weekend showed that the number of confirmed cases in China has soared to nearly 40,000 with the death toll rising above 800. This latest increase in the death toll means that more people have died in China as a result of the disease than died globally during the SARS outbreak of 2003.
Over the last week, an average of 86 people a day have been dying in China, where almost 4000 extra cases were confirmed over the weekend alone. The Hubei province and Wuhan specifically, continue to see the majority of fresh cases confirmed.
Over recent days, the Chinese government stated that the number of new cases confirmed had begun to stabilize. However, the World Health Organisation warned that the Hubei province is still in the middle of a “very intense outbreak” adding that “it’s very, very early to make predictions”.
Last week, there were some reports circulating suggesting that Chinese researchers were close to announcing a vaccine for the virus. However, these reports went unconfirmed. The WHO released a statement saying that research is still ongoing globally, though no vaccine has been found yet.
WHO Downplay Hopes of Cure
Referring to the ongoing outbreak and comments that deaths and cases in China have stabilized recently, the WHO’s director-general Dr. Tedros Adhanom Ghebreyesus made a statement.
“We have to understand it with caution because it can show stability for a few days and then they can shoot up. I’ve said it many times, it’s slow now but it may accelerate.”
Risk Appetite Under Pressure
The market impact from the ongoing outbreak has now reverted back to weakness in equities and commodities prices. Risk appetite has seen some improvement into the middle of last week as reports of a potential vaccine emerged.
However, with the WHO dismissing claims of a breakthrough, and warning against further spread of the infection, risk appetite has weakened again now with equities and commodities under pressure.
The pull-back in the SPX500 over recent days has seen price correcting lower from the 3358.86 highs, trading back below the 3337.75. The current price action is framed by a bearish channel, which can be viewed as a bull flag, suggesting an eventual break higher while price holds above the 3313.93 (structural support and bear channel low). If price breaks below here, the 3298.92 level is the next area to watch. For now, the current move looks corrective and a further move higher is still on watch.