US officials talk down coronavirus market panic, tout financial strength

Senior officials in President Donald Trump's administration on Sunday (Mar 1) tried to calm market panic that the coronavirus might lead to a global recession, saying the united states public had over-reacted and that stocks would rebound due to the American economy's underlying strength.

The S&P 500 index dropped 11.5 % last week as the virus accelerated beyond China's borders, the worst weekly drop since the 2008 global financial meltdown. Roughly US$4 trillion has been wiped off the worthiness of US stocks. 

Economists have begun to worry that the losses could soon start to weigh on consumer spending even prior to the virus becomes widespread in america.

US financial regulators who will gather on Wednesday face their most challenging week in ten years. One official told Reuters that the coming days will determine if the authorities must take measures to bolster market confidence.

Speaking to NBC's "Meet up with the Press" on Sunday, Vice President Mike Pence, who's leading the administration's response to the virus, said that the market "should come back."

"The fundamentals of this economy are strong. We just saw some new numbers turn out in housing and consumer confidence and business optimism. Unemployment reaches a 50-year low. More Americans are working than previously," Pence said.

On Friday, Federal Reserve chair Jay Powell sought to quell fears, stoked by dire economic data from China, flagging that the central bank would do something if essential to support the economy, which he said remained strong.

Trump, seeking re-election on Nov 3, has pressed his view that the risk to the American people from the virus remains "suprisingly low" even as he has faced Democratic criticism that his administration had bungled its response to the outbreak.

When asked on the "Fox News Sunday" programme if the American persons are over-reacting to the current threat, US Health insurance and Human Services Secretary Alex Azar responded, "Yes, absolutely."

The fast-spreading virus has infected around 85,000 persons in 53 countries. China, the world's second-largest economy and epicentre of the outbreak, is home to the vast majority of cases, with about 70 diagnosed in america.

A Washington state man in his 50s with underlying health issues was the first American to die from the virus, officials said on Saturday.

BUSINESSES REACTION

The rapid spread of the virus has led businesses globally to restrict travel, send staff home and cancel conferences, hitting stocks in the aviation, gambling, tourism and luxury goods sectors. 

That disruption to global supply chains and productivity has darkened the outlook for a global economy already was struggling with the fallout of the US-China trade war.

So far, the outbreak's biggest measurable effect has been around China, but a purchasing managers survey last month signaled it had been starting to hit US businesses. Another batch folks monetary indicators due out early this week will be closely watched for proof a growing impact.

Investors now fully expect the Fed to respond with interest cuts this month. Questions remain over how far the Fed would cut and what more officials there and at other central banks can do beyond lowering borrowing costs already at rock-bottom levels for greater than a decade.

Pence said the government does "everything possible" to prevent the virus from spreading and that he is "confident" america is prepared.

Azar said that throughout a meeting of the White House's coronavirus task force on Saturday, US Treasury Secretary Steven Mnuchin had discussed the negative currency markets reaction, saying that a lot of it had been driven by uncertainty. Azar said the administration aimed to quell that uncertainty when you are as transparent as possible about latest developments.

"That's why we are trying to give the American persons all the information we have when we own it so they don't really think there's secret information they're not getting," Azar said.