Markets rise but spread of coronavirus outside China could yet accelerate

Markets mostly rose on Monday.

The S&P 500 rose 0.7 percent and the STOXX Europe 600 rose 0.1 percent but the Nikkei 225 fell 0.6 percent.

The Shanghai Composite rose 0.5 percent as factories in China reopened, although many are expected to remain shut for a while more as a result of the coronavirus outbreak.

“Earnings seem to be the story,” said Sahak Manuelian, managing director of equity trading at Wedbush Securities, noting that they have been “fairly strong” in the US.

Still, with the World Health Organization warning on Monday that the spread of the China coronavirus to people who have not visited China could be “the spark that becomes a bigger fire”, coronavirus fears “remain at the top of investors’ minds”, said Arnim Holzer, macro strategist for EAB Investment Group.

Indeed, Asian economies in particular are vulnerable to supply chain disruptions in China.

“Most Asian economies import 20-30% of their intermediate goods from China,” wrote analysts at Singapore’s DBS Group Research.