China appears to be fighting an increasingly uphill battle to contain the coronavirus outbreak, as new deaths and infections continue to climb — prompting an ominous warning from the World Health Organization.
As of Monday, the deadly virus has claimed over 1,000 lives and stricken more than 40,000 around the world, officially topping the casualties of the deadly severe acute respiratory syndrome (SARS) outbreak of 2002. Meanwhile, the list of businesses that are curtailing travel and shutting down operations in the world’s second-largest economy is lengthening.
The spiraling crisis drew a grim assessment from WHO director general Tedros Ghebreyesus, who posted on Twitter late Sunday that new yet isolated cases are unrelated to recent travel to China.
There’ve been some concerning instances of onward #2019nCoV spread from people with no travel history to 🇨🇳. The detection of a small number of cases may indicate more widespread transmission in other countries; in short, we may only be seeing the tip of the iceberg.— Tedros Adhanom Ghebreyesus (@DrTedros) February 9, 2020
The lion’s share of the crisis is concentrated in China. Yet the ballooning impact of the virus threatens to take a bite out of first quarter earnings — as well as global growth — as a wide range of multinational companies pull back from the country. On Monday, food chain Restaurant Brands International (QSR) announced that half its Burger King locations there had been shuttered.
Meanwhile, continued delays of operations at factories has increased the U.S. economy’s exposure, though analysts say that effect is contained — for now. Wall Street expects to see the impact in the first quarter, and a bounce-back in Q2 and beyond.
“This is a vulnerability for the U.S. economy,” Calvin Schnure, a former Fed economist and current Nareit senior vice president, told Yahoo Finance Monday.
“It’s not enough of a vulnerability to cause a recession...but we really don’t have the information and it’s going to take a couple of months before we really see it,” he added.
Peter Chun, founder of Silverbear Capital, told Yahoo Finance the region in and around China is also feeling the pressure, with U.S.-China trade tensions and the Hong Kong protests having a knock-on effect.
What’s happening in markets
U.S. stocks began Monday’s trading session under pressure, but recovered later in the day. However, last week’s ugly sell-off was still fresh in the minds of traders, especially with the disease’s toll overtaking that of the SARS outbreak.
Tesla announced that it would reopen its Shanghai gigafactory after a brief pause in the face of the outbreak. However, oil — which has plummeted into bear market territory in the last month — is seen remaining under pressure amid the expected hit to global demand. China’s voracious demand makes the country the world’s largest energy consumer by far.
“We’re not sure how to price an unknown pathogen...certainly there will be demand destruction,” said Brian Battle, a partner at Performance Trust Capital.
Travel and leisure was the first sector to feel the impact, followed by retail. The spillover is starting to hit all sectors of the economy that rely on China for supply chain needs, or a consumer market.
‘You can’t shut down the world’
Hotels and casinos continue to feel the pressure, as Macau’s casinos remain shuttered for another week.
Separately, a cruise ship docked in Japan remains on lockdown with 3,700 passengers aboard, of which 130 have been confirmed to have the virus. That is more than double the number from last week. Meanwhile, North Korea is reportedly grappling with its own outbreak, the extent of which is unknown given its closed society.
The WHO is convening a forum this week to determine next steps and help fast-track discovery and research for innovative solutions to curb and treat those affected by the coronavirus. The organization has sent testing kits to countries where they were not available, mostly in Africa.
With countries imposing strict travel bans and quarantines, WHO officials insist there is no reason to cancel travel plans or conferences.
“You can’t shut down the world, either, ” said Michael Ryan, executive director at the World Health Organization's Health Emergencies Program.
Anjalee Khemlani is a reporter at Yahoo Finance. Follow her on Twitter: @AnjKhem