Stocks shrug off COVID-19 outbreak fears even as Japanese economy shrinks

The death toll from the COVID-19 epidemic in China jumped to 1,770 after 105 more people died, the National Health Commission said on Monday.

Outside mainland China, Taiwan reported the island's first death from the coronavirus, bringing the number of deaths outside the mainland to five.

Despite the COVID-19 crisis, stocks around the world have been rising. Julia Horowitz at CNN reported that the S&P 500 rose 1.6 percent last week, the STOXX Europe 600 rose nearly 1.5 percent and even the Shanghai Composite managed to rise 1.4 percent.

"Why do stocks continue to rise in the face of anxiety about the coronavirus? Ongoing support from the Federal Reserve, a stable outlook for corporate earnings and fear of missing out may have something to do with it," Horowitz suggested.

"I think the stock market is just under this belief that no matter what comes our way the Fed is going to save us," Peter Boockvar, chief investment officer at Bleakley Advisory Group, was quoted as saying.

Still, things could get worse.

At least it appears to be getting worse in Japan. The number of infections there has more than doubled since Thursday from 29 to 59 on Sunday night. And that is not counting the 355 cases on the Diamond Princess cruise liner off Yokohama.

Health Minister Katsunobu Kato on Sunday said that several cases have not been traceable to the source of infection. He added: "We are now in a new phase and must anticipate a spread of infections."

The coronavirus outbreak will add to problems for Japan's economy, which reportedly shrank at an annualised rate of 6.3 percent in the October-December quarter, the fastest rate of decline in six years.