The virus outbreak in China seems to be gathering steam. The country already put Wuhan, the city where the virus originated, under quarantine. Today it was announced that a second city will be closed off as the authorities attempt to keep the epidemic under control. With Lunar New Year celebrations coming up, there will likely be millions of people traveling around China, increasing the risks of spreading the disease.
The health warning in China has rattled the markets in East Asia. Chinese stocks were hit the hardest, opening in the red all across the board.
In addition, the virus outbreak in China has also had a negative impact on oil prices. With entire cities getting quarantined and businesses being closed down in order to prevent crowds from forming, investors expect lower oil demand from China, who is the world’s largest importer of oil. Thus, crude oil prices dropped once more, with the Brent crude reaching $62.38, and the WTI at $55.87 per barrel.
In other news, today the European Central Bank is holding its first policy meeting of 2020. However, we do not expect the ECB to adjust interest rates today. ECB President Lagarde will speak afterwards and share more of her policy-making plans for the year.
