Stock markets around the worldfell sharply on Friday as concerns mount over the economic fallout from the coronavirus outbreak.
As the infection rate steadily climbs worldwide and rising numbers of companies sound the alarm on the hit to profits, impose travel bans and put in place contingency plans to protect staff, the FTSE 100 plunged by about 4% to the lowest level since straight after the Brexit vote in 2016.
What is the coronavirus and should we be worried?
It is caused by a member of the coronavirus family that has never been encountered before. Like other coronaviruses, it has come from animals. Many of those initially infected either worked or frequently shopped in the Huanan seafood wholesale market in the centre of the Chinese city.
Severe acute respiratory syndrome (Sars) and Middle Eastern respiratory syndrome (Mers) are both caused by coronaviruses that came from animals. In 2002, Sars spread virtually unchecked to 37 countries, causing global panic, infecting more than 8,000 people and killing more than 750. Mers appears to be less easily passed from human to human, but has greater lethality, killing 35% of about 2,500 people who have been infected.
The virus can cause pneumonia. Those who have fallen ill are reported to suffer coughs, fever and breathing difficulties. In severe cases there can be organ failure. As this is viral pneumonia, antibiotics are of no use. The antiviral drugs we have against flu will not work. Recovery depends on the strength of the immune system. Many of those who have died were already in poor health.
UK Chief Medical Officers are advising anyone who has travelled to the UK from mainland China, Thailand, Japan, Republic of Korea, Hong Kong, Taiwan, Singapore, Malaysia or Macau in the last 14 days and who is experiencing a cough or fever or shortness of breath to stay indoors and call NHS 111, even if symptoms are mild.
China’s national health commission has confirmed human-to-human transmission, and there have been such transmissions elsewhere.
As of 4 March, the global death toll was 3,190, while more than 93,000 people have been infected in more than 80 countries.
The death toll has passed 3,000 in China, where there have been over 80,000 cases. South Korea, the nation worst hit by the outbreak outside China, has had 5,328 cases. More than 44,000 people in China have recovered from Covid-19.
There have been 87 recorded cases and no fatalities to date in the UK. There are 53 confirmed cases in Australia, with two deaths.
We don’t yet know how dangerous the new coronavirus is, and we won’t know until more data comes in. The mortality rate is around 2% at the centre of the outbreak, Hubei province, and less than that elsewhere. For comparison, seasonal flu typically has a mortality rate below 1% and is thought to cause about 400,000 deaths each year globally. Sars had a death rate of more than 10%.
Another key unknown is how contagious the coronavirus is. A crucial difference is that unlike flu, there is no vaccine for the new coronavirus, which means it is more difficult for vulnerable members of the population – elderly people or those with existing respiratory or immune problems – to protect themselves. Hand-washing and avoiding other people if you feel unwell are important. One sensible step is to get the flu vaccine, which will reduce the burden on health services if the outbreak turns into a wider epidemic.
A pandemic, in WHO terms, is “the worldwide spread of a disease”. Coronavirus cases have been confirmed outside China, but by no means in all 195 countries on the WHO’s list. It is also not spreading within those countries at the moment, except in a very few cases. By far the majority of cases are travellers who picked up the virus in China.
No. The spread of the virus outside China is worrying but not an unexpected development. The WHO has declared the outbreak to be a public health emergency of international concern. The key issues are how transmissible this new coronavirus is between people, and what proportion become severely ill and end up in hospital. Often viruses that spread easily tend to have a milder impact. Generally, the coronavirus appears to be hitting older people hardest, with few cases in children.
Sarah Boseley, Hannah Devlin and Martin Belam
The leading index of UK company shares dropped by 270 points to 6,432, with airlines and travel companies among the hardest hit as heavy selling pressure returned to hit markets around the world.
Shares on Wall Street plummeted with the Dow Jones Industrial Average falling by more than 700 points, or 2.8%, in early trading in New York, after a sharp sell-off across Europe and Asia.
As investors offloaded shares in riskier assets, surging demand for safe havens pushed the yield on benchmark government bonds to new record lows – where a lower yield means a higher price. The UK 10-year gilt yield fell as low as 0.206% in afternoon trading, having started the day at 0.33%. The yield on the US 10-year Treasury bond fell to 0.66%, only three days after it first broke the 1% mark for the first time. The trend was reflected in Germany, where the yield on 10-year government bonds fell to a record low of -0.746%.
Chris Iggo of the fund manager Axa Investment Managers said: “The retrenchment of normal business activity is creating victims as well as generating extreme moves in financial markets. We probably won’t quickly return to business as usual.”
Markets rallied earlier this week as finance minister and central bankers in the G7 group of wealthy nations promised a coordinated response and the US Federal Reserve issued an emergency interest rate cut to support households and firms through the worst of the disruption.
However, analysts have warned that central banks lack adequate firepower to respond to the economic fallout triggered by efforts to contain the disease, as interest rates in most advanced nations remain close to the lowest levels on record following a slow decade of economic recovery since the financial crisis.
Escalation of quarantine measures are expected to hit retail, with travel and tourism firms also reporting weaker bookings.
Analysts at the consultancy Oxford Economics said the spread of the shock across Europe would probably bring the eurozone economy “dangerously” close to recession.
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