The outbreak of the coronavirus has led China to lock down the epicenter of the disease Wuhan – a city of 11 million people Fears over the global economic impact of the deadly China virus sent oil prices plunging more than on Monday to extend last week's sell-off, while safe-haven assets including the yen and gold rallied.
As the death toll from the Chinese epidemic jumped to over 80 with those affected worldwide approaching 3.000, analysts said there were growing fears the crisis could become as bad as the SARS outbreak that hammered Asian markets in 2003.
The outbreak of the coronavirus has led China to lock down the epicenter of the disease Wuhan – a city of 11 million people – while imposing tight travel restrictions on a number of other cities including Beijing.
The move comes during the Chinese New Year holiday when hundreds of millions of people criss-cross the country and spend billions of dollars.
The government decided late Sunday it would extend the holiday and related school closures beyond the original Jan 30 end date to reduce population flows, state media said.
The outbreak has led to the cancellation of Chinese New Year festivities, along with temporary closures of Beijing’s Forbidden City, Shanghai’s Disneyland and a section of the Great Wall
Stephen Innes at AxiCorp warned the economic shock to China and the world – just as a growth slowdown appeared to be easing – could be massive.
The biggest threat to the global economy is not just because the disease spreads quickly across countries through networks related to global travel, he said in a note.
But also because any economic shock to China‘s colossal industrial and consumption engines will spread rapidly to other countries through the increased trade and financial linkages associated with globalisation.
He added: Unlike 2003 where SARS was less impactful on the developed world market, the rest of the world could feel the pinch this time around. Gold, another refuge asset in times of turmoil and uncertainty, is heading back towards US$1,600 and the six-year peaks touched at the start of January.