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Global stock markets continue to fall on fears over 2019-nCov

UNITED STATES (OBSERVATORY NEWS) — The global risk aversion in financial markets continues as individual cases of the disease are identified in individual countries, new transport and border restrictions are adopted, and new forecasts of economic damage due to the virus appear.

Stock indices of most countries in various regions of the world closed the January 2020 auction with a new decrease due to fears of the further spread of coronavirus and the negative consequences associated with this phenomenon.

In Asia, South Korean KOSPI fell 1.35% on Friday, January 31. Chinese Hang Seng and Shanghai Composite indices fell 0.5% and 2.75% respectively. Japanese Nikkei 225 became one of the few indices that showed a positive trend, having managed to grow by 1% at the end of the auction.

In Russia, the Mosbirzhi and RTS indices lost 1% and 1.8%, respectively, against the background of the detection of the first cases of coronavirus in the country.

The German DAX closed trading by 1.3%, the French CAC 40 fell 1.1%, the British FTSE 100 fell 1.3%. The Spanish IBEX 35 fell 1.2%, the Italian FTSE MIB fell 2.3%.

In the US, major stock indexes also suffered tangible losses following Friday’s trading: the Dow Jones fell 2.1%, the S&P 500 – 1.8%, the NASDAQ closed down 1.6%.

Due to a decrease in appetite for a risky game, a serious decline in quotations was noted for many commodity assets. In particular, exchange prices for Brent and WTI crude oil decreased in January 2020 to the levels of August-October 2019. Prices for industrial metals also dipped quite noticeably, in particular, in January exchange quotes of nickel and copper fell by 12% and 9% respectively.

The main factor of pressure on the cost levels of many assets remains uncertainty about the further development of the situation with the new virus. A number of experts note that in the short term we can talk about the shock effect on the demand for various securities, which has the current uncertainty.

Goldman Sachs was voiced in the USA forecast in the form of 0.4% of a less rapid GDP growth in the first quarter of 2020 compared to previous estimates made before the new virus.

Many airlines in the world have already announced the termination or substantial reduction in the number of flights to China. The termination of flights from February 2020 in connection with the situation surrounding an infectious disease, in particular, was announced by British Airwaves, American Airlines, Delta Airlines, Finnair, Lion Air, United Airlines and several other carriers. In Russia , flights of all airlines to China, except for Aeroflot, were also suspended .

The total number of patients with coronavirus 2019-nCov, as of January 31, reached almost 10 thousand. At the same time, deaths were recorded only in China. In January, the official number of cases of the new virus already exceeded the number of SARS patients with SARS in 2003, when a little less than 8.5 thousand cases were officially announced.

According to some estimates, the actual number of cases can be much higher. In particular, on Friday, January 31, the British magazine Lancet published a study by experts from the University of Hong Kong who simulated the number of cases taking into account traffic flows in China and various virulence parameters of the new disease.

In the baseline scenario of the simulation, based on disease data from December 31, 2019 to January 28, 2020, it is noted that the number of 2019-nCov patients with coronavirus can be 75,815 people, which is 7.5 times higher than official statistics.

The current situation with the sale of assets on world markets is largely due to the psychological effect of the spread of the new virus.

The number of deaths from common flu in the world as a whole and in individual countries, in particular, far exceeds the number of deaths from atypical viruses. Outbreaks of new viral infectious diseases are nevertheless traditionally accompanied by increased attention from the authorities, the medical expert community, the media and other observers.

Due to a combination of factors in the form of traffic restrictions (both within countries and in terms of cross-border movement), the expected decline in consumer activity and the general negative psychological background, fueled by fears of the spread of the new virus, economic and financial losses from less common and less fatal ones but more exotic viral infectious diseases turn out to be much higher than from seasonal epidemics of influenza and other colds.

With continued identification of new cases of the disease both in China itself and in other countries, as well as taking into account all new measures to restrict transport links with the PRC, which are being taken by the authorities of various states, negative moods on stock exchanges are likely to persist.

Many countries and private companies are also likely to have to revise their previous forecasts for economic growth and financial performance in the first quarter of 2020 due to the uncertainties and limitations associated with 2019-nCov.

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