In the words of Dorothea Mackellar the last few weeks have been a period Of droughts and flooding rains. While initially being celebrated the downpours are turning dangerous with many areas now experiencing severe flooding. The ongoing effects of bushfires and the coronavirus virus epidemic are starting to impact the Australian economy with the tourism sector in particular showing signs of trouble. In international news the initial panic regarding coronavirus has become more subdued and US markets have reacted accordingly with new highs on key indexes. While fears have died down the death toll in China has kept rising with 108 fatalities on Monday alone. In addition to the easing fears over the coronavirus pandemic there has been positive news on the economic front with China set to slash tariffs on $75 billion of US imports this Friday.
Tourism sector in trouble as twin shocks hits
Coronavirus and the recent bushfires are already having a strong impact on Australia’s tourism sector. International visitors are cancelling bookings and operators who depend on Australia’s single biggest tourism market, China, are doing it especially hard as the Chinese and Australian governments restrict travel. Even the domestic market is suffering as Australians cancel their bookings as a result of the damage to bushland and fears over being trapped in a bushfire situation. Australia’s tourism sector is dominated by small business and many will be unable to keep staff through the downturn. It will be only a matter of time before any layoffs in one Australia’s largest employment sectors starts to be felt in the broader economy.
Markets show gains as virus fears ease
The S&P 500 and Nasdaq saw new record highs in overnight trading as coronavirus concerns started to ease. The newfound optimism is being driven by recent statements from Chinese medical authorities that the virus is starting to show signs of containment. The rate of new cases is already declining in some areas and authorities now believe infections may be over by April. US Federal Reserve Chair Jerome Powel was generally positive on the US economy in his recent remarks to Congress with his only major concern the impact of the coronavirus epidemic. Given his statements markets were well primed for a surge on the positive news coming out of China.
Coronavirus death toll reaches 1,000 in mainland China
Over a thousand people have now died in China as a result of the coronavirus epidemic. Monday saw the highest single day death toll so far of the outbreak with 108 deaths recorded. Hubei is still the epicentre of the epidemic with 103 of Monday’s deaths occurring in the province and 67 of those victims passing away in the capital Wuhan. President Xi Jinping spent part of Monday personally visiting patients and medical workers in the capital of Beijing as a show of solidarity with the Chinese people. This marked Xi’s first public appearance since the outbreak of the virus earlier this year. Nearly 20,000 medical personal from across China have been sent to Wuhan to try and contain the epidemic. For now though the rate of infection contains to rise with 2,478 new cases being reported on Tuesday bringing the total number of infected to 42,638.
China eases tariffs on $75 billion of US goods
In encouraging signs of a thawing of relations China has announced a reduction in tariffs on $75 billion of US goods. The move was expected and was part of the US-China trade agreement reached in early January. China’s economy is facing severe economic shocks as a result of the coronavirus epidemic and has already started a program of fiscal stimulus to help maintain its economic growth. As part of last weeks announcement China’s Ministry of Finance signalled its desire to work with America on removing all tariff increases. Such a move would signal a return to economic normality and an end of the current US-China trade war.