“Stocks surged in the final minutes of trading on Monday, snapping back from one of the worst weeks for global markets since the 2008 financial crisis,” the New York Times reports (porous paywall):
The S&P 500 jumped 4.6 percent, the biggest single-day leap since late December 2018. The rally followed news that central bankers from the world’s biggest economies would join a conference call with Group of 7 finance ministers on Tuesday to discuss a response to the outbreak, fueling expectations among investors that governments might lower interest rates in tandem.
However, a further escalation “could cut global economic growth in half,” according to the Organisation for Economic Cooperation and Development (OECD). On February 28, the World Health Organization raised “the risk of spread and the risk of impact of COVID-19 to very high at global level,” per SCMP. Previously, the risk of global spread was “high.”
In related news:
Manufacturing activity in China fell to record lows in February. CNN explains:
The media group Caixin said Monday that China’s manufacturing purchasing managers index sank to 40.3 in February, down from January’s 51.1 and the lowest reading since the survey began in 2004. It was also well below the 45.7 that analysts polled by Reuters expected.
Banking group ANZ estimates that China’s economy as of last weekend was “operating at 20 per cent capacity,” the Financial Times reports. Official numbers showed that “over 90% of state firms are back in business,” SCMP reports, though small and medium-sized enterprises are the hardest hit. Meanwhile, “Starbucks now has opened 85% of its 4,292 China locations,” the company CEO said, according to Bloomberg.
Demand for oil is being hit hard, since China is where much of that demand usually comes from. Bloomberg reports that “the volume of crude that will be shipped to China from West Africa [in March] is set to drop by at least ten million barrels as the demand destruction caused by the coronavirus hits home.”
The crisis is “teaching hard lessons about China-only supply chains,” writes The Economist: “foreign governments and business bosses will not quickly forget a frightening lesson: for some vital products, they depend on one country.”