US stock futures are back in the red as the number of confirmed deaths in China surpassed 600 while the death of a doctor who was punished by the police for first reporting the virus back in December has stoked outrage on the mainland, as messages of rage and frustration flooded social networks operating on the Chinese Internet.
Over night, Beijing was repeatedly embarrassed as its extreme quarantine/lockdowns spread further throughout the country, with nearly all of the country's major cities except for Shenzen imposing at least some level of travel restriction, with many cities imposing the harsh quarantine measures requiring everyone to stay indoors.
As more companies from tech to automotive warn about serious supply-chain disruptions that might temporarily halt production, JPMorgan warned last night that the outbreak could drive China's economy to a virtual standstill, wiping more than 4 percentage points off annual GDP growth in 2020. It should go without saying, but this would mark a return to the economic stagnation of the cultural revolution.
President Xi has already started scapegoating local officials, meanwhile, reports emerged overnight of another confirmed case of the virus in Singapore with no links to China, suggesting that it was another human-to-human transmission.
But after Beijing yesterday announced that it would scale back trade-war tariffs to allow greater numbers of US goods to flow into the country, President Trump has decided to do him a good turn, handing him a powerful propaganda tool in a pair of supportive tweets, uncritically relaying Xi's assessment that the effort to suppress the virus is going "very well".
Trump praised China's "building hospitals in a matter of days" and added that they are "doing very well." Meanwhile, the US will continue to work closely with China, the president pledged.
Just had a long and very good conversation by phone with President Xi of China. He is strong, sharp and powerfully focused on leading the counterattack on the Coronavirus. He feels they are doing very well, even building hospitals in a matter of only days. Nothing is easy, but...— Donald J. Trump (@realDonaldTrump) February 7, 2020
....he will be successful, especially as the weather starts to warm & the virus hopefully becomes weaker, and then gone. Great discipline is taking place in China, as President Xi strongly leads what will be a very successful operation. We are working closely with China to help!— Donald J. Trump (@realDonaldTrump) February 7, 2020
But it looks like we're going to need some more bullish trade headlines to once again assuage the market's anxieties about the viral outbreak.