What Is the Coronavirus and Its Impact on Markets?

Written by Danny Abramov

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February 3, 2020

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Economics | Economics/ Global | Healthcare & Biotechs | Stocks

The Novel Coronavirus (2019-nCoV) :

The world is anxious about a new virus that spreads with tremendous velocity. But what exactly is the novel coronavirus and which possible consequences can it cause for the economy and the stock market?

The 2019-nCoV is a new strain of Coronaviruses (CoV), which are a large family of viruses, that can cause different illnesses

ranging from the common cold to more serious diseases, such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV). It is believed that the virus originates from animals at a food market in the Chinese City of Wuhan, at the end of last year.

Public Health Emergency of International Concern

The World Health Organization (WHO) was alerted several cases of pneumonia in the end of December 2019. By now, the virus can also be transmitted from person to person. Last week WHO has declared the virus ti be Public Health Emergency of International Concern.

The hot zone in China, around the City of Wuhan, was shut down by the Chinese government shortly after the outbreak, and remained under lock-down until today.

Cases of the new coronavirus have been reported in Australia,Cambodia, Canada, France, Germany, Japan, Malaysia, Nepal, SriLanka, Singapore, Thailand, South Korea, the UAE, the UnitedStates, and Vietnam. However, the majority of the more than 8,000 cases have been identified around the area of Wuhan, in China.

Many airlines have cancelled flights to Mainland China and several countries have started to evacuate their citizens from Wuhan.

What treatment is available?

No drugs have been approved for any coronavirus diseases and the main treatment of the novel coronavirus is supportive care, including to make sure the patient is getting enough oxygen.

Officials with the National Institutes of Health reported that advances in technology could make it possible to test a vaccine against the novel coronavirus within three months.

International teams of scientists will be allowed into the country to help evaluate and contain the outbreak.

What impact the Virus has on the Stock Market?

The European markets were early affected by the growing fear about the spreading Coronavirus, when the U.S. stocks followed later and concerns are still rising that the virus could not only slow down China’s economy, but endanger the global economy.

Many companies with branches in the Wuhan area followed the lock-down, initiated by the Chinese government, which can result in major losses. Meanwhile it remains uncertain when the companies can continue business as usual.

Economists share the believe that the new virus will have a huge impact on the economy in short-term.