Via Financial Times

Japan is on the brink of a rapid expansion in coronavirus cases, an expert panel warned, a day after global stocks suffered their worst session in two years on fears over the accelerating international spread of the disease.

The government panel said that the country’s 160 confirmed cases were detected in more than 16 different prefectures and in numerous cases the source of the infection was not clear. This excluded cases from an infected cruise ship and Japanese evacuees from China.

“We are at the crossroads,” Shigeru Omi, head of the Japan Community Health Care Organization and a former regional director for the World Health Organization, said on Tuesday. “Local transmission is already going on.”

The comments came after a spate of new virus cases outside China, including outbreaks in Italy and South Korea, that dashed investor hopes that the epidemic was close to being contained.

Globally, the number of confirmed cases jumped to more than 80,000 on Tuesday, with 2,699 deaths.

On Tuesday, US stock futures rebounded slightly and most Asian markets steadied, although shares in China fell on nervousness over the government’s recent handling of the outbreak. Futures trading pointed to gains of about 1 per cent when Wall Street opened on Tuesday.

The S&P 500 dropped 3.4 per cent on Monday, erasing all its gains for the year in its biggest slide since trade tensions rattled markets in February 2018. The FTSE All-World index lost 3 per cent.

Investors flocked to the safety of government debt, pushing the yield on the US 10-year Treasury bond down more than 10 basis points to 1.369 per cent, just above its record low, as expectations grew that the US Federal Reserve would be forced to cut interest rates by April.

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Energy stocks led the stock market decline, driven by a weakening oil price, followed by technology shares. Transport stocks were also battered.

President Donald Trump responded by tweeting that the virus was “very much under control in the USA”, adding: “Stock Market starting to look very good to me!”

European bourses also sold off on Monday as UK stocks suffered their worst day for five years and Italy’s MIB index dropped 5.4 per cent in its largest fall since 2016.

Johanna Chua, chief Asia Pacific economist at Citi, said the “situation remains fluid and headline sensitive with market participants monitoring the spread of infections in several countries/regions including Italy and the Middle East”.

The market turmoil began after Italy imposed a quarantine across at least 10 towns over the weekend in an effort to contain the biggest outbreak of the virus outside Asia, with 229 confirmed infections and seven deaths.

South Korean authorities reported 231 new cases of the virus, bringing the total number of infections to 893. The government added it had put 7,000 troops under quarantine after 11 had tested positive for the virus.

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Iran said there had been 12 deaths and 61 confirmed coronavirus cases in the country, a sharp rise from the eight fatalities and 43 infected patients it reported a day earlier. Despite the outbreak in Italy, EU authorities said there were no plans to suspend travel across the 26-country Schengen area of visa-free travel.

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“We need to take this situation extremely seriously — but we must not give in to panic and of course to disinformation,” said Stella Kyriakides, the EU’s health commissioner.

The expert panel in Japan recommended changing its strategy of keeping the infection out altogether to containing it and slowing its spread. It no longer made sense to test everybody who might have been exposed to the virus, they said, as doing so would overwhelm the healthcare system.

Instead, Japan was asking anybody who felt ill to isolate themselves and said they should only seek medical help if they suffered severe symptoms.

“The biggest objective of our response from this point should be to control the speed of the infection’s spread and minimise the number of deaths and people with severe symptoms,” the panel said.

The panel said that the next one to two weeks would be decisive in preventing the spread of the virus.