TOKYO • Group of Seven (G-7) finance officials said yesterday that they would take all possible steps to safeguard the global economy from the spreading coronavirus outbreak, with Bank of Japan governor Haruhiko Kuroda promising a "good message".
On a conference call, the group of rich nations' finance ministers and central bank governors pledged actions including fiscal measures where appropriate to support the global economy, Japanese Finance Minister Taro Aso said.
He said the desirable policy response would vary from country to country. The global policymakers' united front offset anxiety over the coronavirus' rapid spread in dozens of countries and aided a recovery in world stocks and oil prices.
"This is a tug of war between hope and fear. Central banks are giving hopes with their potential stimulus," said Mr Vasu Menon, senior investment strategist at OCBC Bank Wealth Management. "The question is what they will do. Monetary policy is already very loose and interest rates are very low," he added.
Global stocks suffered a rout last week on fears that the disruption to supply chains, factory output and global travel caused by the epidemic could deal a serious blow to a world economy trying to recover from the US-China trade war.
The coronavirus, which emerged in the central Chinese city of Wuhan late last year, has spread fast around the world over the past week, with more new cases now appearing outside China than within.
There are more than 92,000 cases globally, with over 80,000 of them in China, and infections appearing in 77 other countries and territories, with Ukraine the latest country to report its first case. The death toll exceeds 3,000 worldwide with more than 2,900 in China.
New cases in China have been falling sharply, with 125 reported yesterday, thanks to its aggressive containment measures. China is now increasingly concerned about the virus being brought back into the country by citizens returning from new hot spots elsewhere.
Yesterday, the authorities asked overseas Chinese to reconsider or minimise their plans to travel home. All travellers entering Beijing from South Korea, Japan, Iran and Italy would have to be quarantined for 14 days, a city official said. Shanghai has introduced a similar order.
The most serious outbreak outside China is in South Korea, where President Moon Jae-in declared war on the virus, ordering additional hospital beds and more masks as cases rose by 800 to more than 5,000.
About 30 people have died in South Korea. In the United States, the virus is now believed to be present in at least four communities in the Pacific Northwest - two in northern California, one in Oregon and one in Washington state - and the authorities there are having to go well beyond the quarantine of infected travellers and tracing of close contacts, which until now had been the response. Six people have died in the Seattle outbreak.
Iran reported infections exceeding 2,000, with more than 70 deaths, including a senior official.
The death toll in Italy jumped to 52 on Monday from 34 the day before and the total number of confirmed cases in Europe's worst-affected country climbed past the 2,000 mark.
Germany reported 31 new infections, taking its tally to 188.
US stock futures retraced earlier gains on the news while US 10-year Treasury yields firmed slightly to around 1.13 per cent.
Fed funds futures are pricing about 45 basis points of rate easing by the end of this month.
While Australia and Malaysia cut interest rates yesterday, investors are looking to the Federal Reserve and major counterparts to do the same, perhaps outside of their normal meeting schedule and in a coordinated fashion.
Fed chairman Jerome Powell last Friday promised to "act as appropriate" to support the US' longest-ever expansion, a statement that helped cushion stocks after their worst week since 2008.
REUTERS, BLOOMBERG
