CHINA – World stock markets recovered slightly on Wednesday as Beijing’s promise to fight the coronavirus outbreak slightly eased fears. Global shares dropped drastically at the start of the week when new cases of the virus were reported.
Asian benchmarks rebounded after the previous trading day’s sell-off. Wall Street also showed signs of recovery while European shares opened higher today.
The Hang Seng Index of Hong Kong went up 1.1% at the start of the trading day and ended it around 1.21% higher. It was a welcome recovery as the index experienced one of its worst performance at the start of the week.
The Shanghai Composite Index gained 0.4% after dropping more than 1% on Wednesday morning. Meanwhile, the country’s blue-chip index CSI300 rose 0.4%. The KOSPI and the Nikkei 225 also went up 1.2% and 0.6% respectively.
Traders breathed a collective sigh of relief at the turnaround, especially after the “sea of red” that plagued the Asian markets on Tuesday.
Stocks in the region dropped when China admitted that the new strain of the coronavirus is transmittable between humans.
The announcement was a serious blow to airlines as they’re beginning to gear up for the massive exodus of travelers celebrating the Lunar New Year. However, stocks in Chinese airlines quickly recovered on Wednesday.
China’s yuan also recovered as the market quieted down ahead of this week’s holiday. The onshore yuan closed at 6.9012 against the dollar while the offshore yuan was up by 0.1%. The currency recorded its biggest daily loss since August on Tuesday.
The rebound came after the National Health Commission of China held a televised news conference and Vice-Minister Li Bin proclaimed that the country is working closely with the World Health Organization (WHO) and that the government is implementing tighter containment steps in hospitals.
China’s President Xi Jinping also tasked officials to make fighting the virus its number one priority.
Beijing’s promise also calmed fears in Europe. The STOXX 600 broke out of its two-day losing streak and advanced by 0.3%. Meanwhile, the DAX of Germany reached a new high.
Analysts say markets are rallying on the hope that China will stay true to its statement and handle the outbreak properly.
While the coronavirus outbreak has brought to mind the 2003 China Sars Crisis, markets are showing more faith in Beijing’s capability to handle the situation.
Jeremy Farrar, the director of the health research group Wellcome, said the speed that the virus was identified showed how much China has advanced with regards to its public health. It also underlined the close coordination of the country with the WHO.