Markets recover some losses amid coronavirus growth fears - business live

Rolling coverage of the latest economic and financial news, as some Asia-Pacific markets continue to slide

• Shares are trying to recover from Monday's rout
• Latest: Chinese economy could start contracting, Pantheon fears
• Copper down for 10th day running. Brent back at $58/barrel
• Japan's Nikkei hit three-week low today
• Introduction: Investors fear coronavirus impact

6.45pm GMT

It's nearly time for the first US interest rate decision of 2020 - but don't expect many fireworks.

The Federal Reserve is widely expected to keep its benchmark Fed Funds rate unchanged, at 1.5% to 1.75%.

$USD #FOMC | Following three consecutive "insurance" rate cuts in 2019, the US Federal Reserve is widely expected to unanimously remain on hold at its first monetary policy meeting of the year - @dev_peter https://t.co/qimGsBqtt9 pic.twitter.com/17kT7wG54n

4.54pm GMT

Finally, the FTSE 100 index has closed 68 points higher at 7480, up almost 1% today.

That still means it has lost 100 points over the last two sessions, amid coronavirus worries.

Stock markets in Europe have pulled back some of the ground that was lost yesterday. In relation to the coronavirus, the situation has deteriorated in the past 24 hours as the number of confirmed infections has risen, and so has the number of fatalities. The positive move in equities is probably down to short covering plus bargain hunting as the health crisis has deepened. The longer the news story hangs around, traders might build up a tolerance to it.

The Chinese central bank has made it clear it is willing to use monetary tools in a bid to lift economic sentiment, should they feel it is required. The message from Beijing reassured traders somewhat, but the acid test will be whether the rebound lasts or not.

3.44pm GMT

Here's an interesting thread on the implications of the coronavirus, from Canada's Toronto-Dominion Bank (TD).

1/6 TD: We are only 1 month into the New Year & investor questions have never been higher on a flurry of events. So far, we've seen a China-US trade deal, signing of USMCA, the sudden escalation of US tensions w Iran & most recently, growing concerns over a #coronavirus outbreak

2/6 TD: It's reasonable to assume that mainland #China #growth will absorb significant #economic loss in the current quarter and potentially the next. Estimates guided by SARS place the annual impact at 1% or more (cont)#coronavirus pic.twitter.com/3o9unQn16d

3/6 TD: "It is early days and estimating #economic impacts (outside China) would be purely an exercise in speculation. What we can say is that if this #coronavirus does follow a similar path as SARS, impact on #Canada & the #US would be limited to 0.1 percentage points or less"

4/6 TD: So far #marketsentiment it has been shaken, but not stirred. #Bond, #equity & #volatility measures have moved in the direction of risk & uncertainty, but with some restraint. #Markets will always fear what they cannot see and accurately measure." (cont)#coronoavirus

5/6 TD: During peak #SARS period, #VIX moved higher by roughly 10 points & remained elevated, but this also coincided with military mobilization and subsequent commencement of the Iraq war. Even with this toxic combination, the VIX upward shift lacked duration and depth. pic.twitter.com/pfvKkdajM6

6/6 TD: Today it has risen by less than 10 points. Interestingly, this #fear-based metric captures a more tempered response by #financial #market participants relative to periods when trade tensions flared up between the US and China in the spring and summer of 2019#coronoavirus pic.twitter.com/ORluhtp0a1

3.30pm GMT

Stock markets are now moving higher, lifted by hopes that the coronavirus outbreak could be controlled following Zhong Nanshan's optimistic comments today.

"With the death toll rising above 100, financial markets are still trying to gauge the potential reach of this deadly virus. By comparison, the SARS virus impacted 8098 people with 774 fatalities. The question now is how quickly can this virus be contained and, in the meantime, how many countries and economies will be impacted? In times of risk aversion money normally floods into the Japanese yen and the Swiss franc.

Due to the proximity of Japan to China the risk of the virus penetrating Japan is high, with one confirmed case so far. Therefore, the Swiss franc is currently seen as the ultimate safe haven and has strengthened by over 3% against the Euro from its pre-Christmas level of 1.10 CHF to the Euro in the 1.06's, the strongest level since April 2017.

3.08pm GMT

Just in: US consumer confidence has rallied this month, by more than expected.

The Confidence Board's survey of consumer morale has spiked to 131.6, up from 128.2 last month.

US Consumer Confidence up to 131.6 from 128.2

USD Conf. Board Present Situation (JAN),
Actual: 175.3
Expected: N/A
Previous: 170https://t.co/ghmr6WftYa

2.58pm GMT

A top Chinese respiratory scientist has predicted that the Wuhan coronavirus has predicted that the outbreak could peak in one week or around 10 days.

Zhong Nanshan made the comments in an interview with Xinhua, the state news media site.

"It is very difficult to definitely estimate when the outbreak reaches its peak. But I think in one week or about 10 days, it will reach the climax and then there will be no large-scale increases," Zhong said.

Zhong is the head of a national team of experts set up for the control and prevention of the novel coronavirus-caused pneumonia and an academician of the Chinese Academy of Engineering.

For anyone not following every twist in the Wuhan virus story, Zhong Nanshan is the expert who first sounded the alarm. Now saying it will peak in 7-10 days and "then there will be no large-scale increases". Far more positive than other recent predictions. https://t.co/sRIppMcyMU

Zhong Nanshan who had a big part in managing SARS....

Novel coronavirus outbreak may reach its peak in one week or about 10 days: expert

2.23pm GMT

Despite the slump in demand for aircraft, overall US durable goods rose by 2.4% in December.

But if you strip out defence kit, demand was slightly lower. That's a disappointing sign, says Chad Moutray, chief economist at the National Association of Manufacturers:

New durable goods orders rose 2.4% in Dec., bouncing back after falling 3.1% in Nov. The latest figures are boosted by very strong defense aircraft & parts orders. Excluding transportation equip., new durable goods orders edged down 0.1%, extending the 0.4% decline seen in Nov. pic.twitter.com/Q6ERpxu86u

New durable goods orders have fallen 3.7% over the past 12 months, with a decline of 1.0% with trans. equip. excluded. New orders for core capital goods-a proxy for capital spending-decreased 0.9% in Dec., but on a year-over-year basis, this figure has increased by 0.9%. pic.twitter.com/Y5sC3DvgaU

Durable goods sales ended the year on a disappointing note, despite the stronger headline number, with global economic headwinds and trade uncertainties challenging the sector. Look for signs of improvement in the coming months considering recent stabilization in some measures.

2.16pm GMT

Ouch. We have fresh evidence today that Boeing's 737 Max crisis is causing economic harm.

2.00pm GMT

Back in the UK, some of the investors caught up in Neil Woodford savings scandal have learned how much of their money has been lost.

And, as feared, it's a very heavy blow.

Related: Neil Woodford investors take hefty loss as payouts begin

1.51pm GMT

Several companies have instructed some staff not to come into the office

Wall Street bank Goldman Sachs has told staff who have visited mainland China to work from home for the next fortnight, Reuters reports.

Goldman says staff with mainland China exposure should avoid office https://t.co/irP10AbZDm pic.twitter.com/pMRaqUyjsn

Chinese tech companies like Tencent and Alibaba are telling their workers to stay home through February 10 because of the coronavirus in Wuhan. @onlyyoontv has the latest on the #coronavirus spooking markets and investors: pic.twitter.com/4tqesYcZcP

12.51pm GMT

The oil price would probably be even lower, but for ongoing supply disruption in Libya.

Related: Oil chief urges west to call out foreign meddling in Libya conflict

"The University of Hong Kong estimates that at least 25,630 people in Wuhan have symptoms of the virus with 44,000 infected with no symptoms yet. This should imply that the sell-off in Brent crude is still not yet over, as the crisis is still intensifying....

On the supply side however, we see that Libya's oil production will likely be down to zero (from 1.1 m bl/day) within days. OPEC is also following the coronavirus situation closely. It will most likely step in and reduce supply for a month or two in order to prevent an inventory build-up which the market would have to struggle with for an extended period.

12.12pm GMT

The oil price is also suffering today, with Brent crude down 1% at $58.88 per barrel.

11.51am GMT

Back in the UK, retail sales remain flat this month despite the so-called Boris Bounce.

Retailers are evenly split between those enjoying stronger sales this month, and those suffering weaker demand.

"Both official data and business surveys are painting a picture of subdued activity for retailers. A challenging Christmas has extended into the New Year, with little expectation of any improvement soon.

"2020 looks set to be another tough year for the sector as growth in households' disposable income is set to remain modest and retailers continue to battle longer-term issues such as digital disruption and the cumulative burden of policy costs. The upcoming Budget provides an opportunity for the Chancellor to support retailers, primarily by fixing the broken business rates system."

11.35am GMT

Copper prices are also being hurt by the prospect of China's economy slowing as its government grapples with the coronavirus shutdown.

The futures price of Copper is down 0.5% today, and is on track for its 10th daily fall in a row.

someone call a doctor for the Dr. Copper! (15 Jan was that recent high) pic.twitter.com/JB034e0XQY

10.50am GMT

Fashion chain Burberry is suffering badly from the virus crisis.

10.36am GMT

Neil Mackinnon, global macro strategist at VTB Capital, has also been looking at previous viruses such as SARS, for indications of how the Wuhan coronavirus may play out.

The lesson, he says, is that markets may tumble in the face of an epidemic-- but they then typically bounce back.

"Of course, making any accurate quantitative estimate of what the coronavirus means for global and Chinese GDP growth estimates or what it might mean for financial markets is fraught with difficulties. However, that is the nature of the beast. Equity markets seem to want to believe "good news".

In other words, investors, in the absence of anything else to work on, refer to previous viruses, such as SARS in 2003 or MERS in 2012, as a template for price action in the markets or in terms of economic developments. The investment message from those episodes is that equity markets can drop 10% or so over a 1-3 month period before strongly bouncing back. Negative effects on economic growth are equally short-lived. For example, developing Asia recovered at an 11% pace after the summer of 2003."

10.02am GMT

The Coronavirus crisis could drive China's economy into reverse, fears Freya Beamish. chief Asia Economist at Pantheon Economics.

In a new research note, Beamish predicts that China's "true" real GDP could be flat, or even fall in January-March, due to the efforts to contain the spread of the coronavirus, factory shutdowns, and fearful consumers.

We reckon the brunt of the damage was done in Q2 2003, when real GDP growth dropped to 1.8% quarter-on-quarter, from an average of 2.8% in the previous three quarters.

Growth then rebounded sharply in Q3, to 3.4%, coming off the favourable base of Q2, but again was weak in Q3.

The bottom line here is that China could even see a contraction in quarterly real GDP growth in Q1, in reality, depending on the timing of factory closures and how long it takes to contain the virus.

We are assuming that missed spending will be recouped in Q2, leading to a bumper quarter, though it's very possible that some of the expenditure on services around the holiday simply will be lost. This means the overall economy may not bounce back in the same way as in 2003. In short, you can make up for factory shutdowns by increasing overtime, but making up spending for a lost holiday is more complicated. And the containment measures could go on for longer than in our baseline assumption.

"Containment Measures Could Mean a Quarterly Fall in Chinese GDP" @freyabeamish @mc_economist https://t.co/MSpsHOeFdE #PantheonMacro pic.twitter.com/8Q8XHb6zEm

9.35am GMT

A person in Japan who has not visited Wuhan has contracted the coronavirus, local media are reporting.

Reuters explains:

Japanese Health Minister Katsunobu Kato said a person in Japan who had not visited Wuhan has contracted the new coronavirus, Japanese media reported on Tuesday.

The infected person is a tour bus driver in his 60s in the city of Nara, Kyodo said.

9.06am GMT

The European market rally is now fading, as Hong Kong's leader Carrie Lam outlines new measures to curb transport between her city and mainland China.

Hong Kong is suspending its high-speed rail link with China, and also cutting the number of flights in an attempt to limit the spread of coronavirus.

HONG KONG LEADER SAYS TO HALVE NUMBER OF FLIGHTS TO MAINLAND CHINA AMID CORONAVIRUS

BREAKING: China will stop individual travelers to Hong Kong to curb novel coronavirus spread, Chief Executive Carrie Lam says https://t.co/m2mX3TK1oS pic.twitter.com/Igky1eSiiR

HONG KONG LEADER CARRIE LAM SAYS TO HALT HIGH-SPEED RAILWAY SERVICE BETWEEN CITY AND MAINLAND AMID #CORONAVIRUS

TO HALVE NUMBER OF FLIGHTS TO MAINLAND CHINA AMID CORONAVIRUS

HIGH-SPEED RAILWAY SERVICE BETWEEN CITY AND MAINLAND TO BE HALTED FROM JAN. 30

8.45am GMT

After their worst day in four months yesterday, European stock markets have opened higher this morning.

It makes sense to compare and draw some inference between now and the performance of markets during SARS. European equities saw a 20-25% drawdown during SARS. The FTSE 100 is down just under 4% from its recent peak and the DAX has lost under 2.5% so there is plenty of downside risk. Is that size correction likely? The lower mortality rate of the Wuhan virus is a reason for optimism it won't. But extra caution is needed because China is now much more important to the global economy than it was in 2003.

We think it is better to wait for the rise in the number of cases to slow before getting positive about the markets again. We know there is an incubation period of 14 days and the virus can be passed on when the subject is not showing symptoms. Putting that together, we could be on the cusp of a plateau or a massive escalation in the number of cases.

8.27am GMT

MSCI's index of emerging markets shares has dropped by 0.5% today, amid worries that the coronavirus will hurt global growth.

John Velis of BNY Mellon Markets says:

With Chinese authorities working hard to contain the spread of the virus, and firms and provinces extending the week-long lunar new year to prevent massive travel volumes at the height of an epidemic, we're seeing anecdotal evidence of large factories going idle until well after the new year, and foreign companies evacuating non-Chinese citizens.

8.24am GMT

Japan's stock market has fallen to a three-week low today.

Shares of South Korean mask producer Monalisa surged 29%, while South Korean pharmaceuticals Kukje Pharma and Woojung Bio added 29% and 21% respectively on Tuesday.

Japan's Kawamoto Corp, which supplies medical products including masks, saw its share prices tripled, while Japanese protective clothing maker Azearth rose 53% in the past week.

Oops! Shares of Japan's Kawamoto, which manufactures face masks, go ballistic on #coronavirus fears. pic.twitter.com/jIC9l4LB70

8.05am GMT

Several economists fear that the coronavirus will hurt China's economy -- although there's uncertainty over quite how bad it will be.

My colleague Martin Farrer explains:

Economists agreed that the outbreak will have a negative impact in China but the lack of understanding about how the virus spreads and how bad it might be was adding to uncertainty to the mix and compounding investor concerns.

Citigroup said on Tuesday: "The wildcard is not the fatality rate, but how infectious the Wuhan virus is. The economic impact will depend on how successfully this outbreak is contained."

Related: 'Significant threat' to Chinese economic growth amid coronavirus outbreak

7.56am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Related: Coronavirus: China death toll rises to 106 with first fatality in Beijing - live updates

"We haven't got enough information," the economist and former Reserve Bank board member Warwick McKibbin said.

McKibbin has previously estimated that a "mild" pandemic in Asia, such as the 1968 Hong Kong flu outbreak which killed about 1m people, would carve 0.8% from Australia's gross domestic product, with most of the damage felt in the services sector.

Related: Australian shares tumble over fears China's coronavirus could damage economy

The problem is investors have very limited visibility of the current situation in China, have virtually zero knowledge of epidemiology and virology, and have no clue how bad it will get or lasting the impact will be.

Risk models are not geared for this situation.

Incubation period for amateur epidemiology appears to be about a week.