- The ASX has moved higher on Thursday, extending this weeks rally to more than 100 points, or around 2%.
- It follows a similar rally on Wall Street, as global markets appear to be brushing off the coronavirus threat.
- However, as more cases come to light, and the virus takes a real impact on the Australian economy, the run could be short-lived.
- Visit Business Insider Australia’s homepage for more stories.
The coronavirus may still be spreading, but sharemarkets at least appear to be growing comfortable with the threat.
The Wuhan virus has proven more deadly than SARS, having to date infected more than 45,000 people and killed at least 1,100, but the Australian Securities Exchange (ASX) seems to be shrugging off the threat.
The ASX 200 added 50 odds points or around 0.7% in the first 30 minutes of the session on Thursday, climbing to 7,145 before dropping back to around 7,100 in early trading.
It follows strong momentum on Wall Street this week, with the S&P 500 and Dow Jones both adding around 1.8% and the Nasdaq more than 2% since Monday.
But while Australian companies and global markets may be rallying, they’re hardly out of the woods yet. The total fallout from the virus is hard to predict, with the numbers of those infected still rising. New research suggests only 1 in 19 people are being diagnosed in the Wuhan epicentre, suggesting figures still have some way to rise.
It’s certainly set to have a bigger impact on the Australian economy, with its significant ties to China, potentially surpassing initial forecasts of $2 billion. The suspension of tour groups and cancellation of holidays has helped turn away the 1.4 million Chinese visitors who visit Australia annually, slashing tourism dollars during the normally-busy Lunar New Year holidays.
Gaming and casinos which rely heavily on cashed-up Chinese punters are due to be hit, as are Australia’s retail and education sectors. Meanwhile, subdued Chinese demand resources like iron ore, are helping slash the price for some of Australia’s largest exports.
These factors clearly aren’t reflected by the daily movements of the local share market. With the government’s surplus now threatened by the virus and the bushfires, the economy may not quite as healthy as this week’s rally suggest.
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