Mexico, World Markets Fall; Flu Pandemic

123jump.com Staff
27 Apr, 2009
New York City

World markets remained focused on the swine flu outbreak in Mexico and the possible pandemic outbreak. Cases of flu have been reported in the U.S., Canada, Spain and New Zealand. Tour operators and air and cruise transportation companies decline and select drug makers rise. Mexico drops 3.5%.

[R]11:15AM New York, 4:15 PM London – World markets remained focused on the swine flu outbreak in Mexico and the possible pandemic outbreak. Cases of flu have been reported in the U.S., Canada, Spain and New Zealand. Tour operators and air and cruise transportation companies decline and select drug makers rise.[/R]

World financial markets were on the edge after a breakout of swine flu in Mexico and its spread to the U.S.A., Canada, Spain and New Zealand.

U.S. market indexes declined between 0.7% and 1.1% in the morning trading with the companies in pharmaceuticals, transportation and food sector on the decline. Airlines and cruise operators fell more than 10%.

Mexico has reported more than 100 deaths linked to the swine flu outbreak and the U.S. has reported cases so far in five states. The Center for Disease Control reported on its Web site that so far 20 cases have been reported in the states of California, New York, Kansas, Ohio and Texas.

The CDC in its advisory noted on the site, “Laboratory testing has found the swine influenza A (H1N1) virus susceptible to the prescription antiviral drugs oseltamivir and zanamivir and has issued interim guidance for the use of these drugs to treat and prevent infection with swine influenza viruses.”

The flu outbreak is likely to be severe in the states bordering with Mexico.

Airlines and Cruise liners Stocks Fall

AMR Corp ((AMR)) declined 13%, UAL Air Group ((UAUA)) fell 14%, US Air Group ((LCC)) dropped 15%. Carnival Corp ((CCL)) declined 10% and Royal Caribbean Cruises Ltd. ((RCL)) lost 13%.

Mexican Stocks and Peso Decline

Mexican peso declined as much as 3% after the spread of swine flu and the linking of 20 of the more than 100 deaths to the outbreak. The peso declined to 13.82 against a dollar and Bolsa index dropped 3.5% to 21,850.27.

The tourism revenue is the third largest source of foreign exchange and earns more than $13 billion only to be surpassed by exports and remittances.

Asian Markets Fall, HK Exports Drop

The markets in Asia generally closed lower with Chinese markets indexes leading the losers with a loss of more than 2%. Seiko Epson reported annual loss of $1.1 billion and Sharp Corp forecasted annual income of 3 billion yen or $31 million on higher cost cuts.

Hong Kong reported a sharp fall in exports and imports in March, the third monthly decline in a row this year.

Exports fell 21.1% and imports declined 22.7% in March from a year ago with a trade deficit of HK$18.2 billion in the month. For the quarter, Hong Kong exports fell 21.9% and imports declined 22.8% from a year ago period.

European Pharma Rise

European markets were on the decline with a fall in commodities and crude oil prices and first reported case of swine flu in Spain. Airlines led the decliners in trading with Air France KLM and British Air declined as much as 10% and 17% and the Spain based Iberia Lineas Aereas de Espana SA dropped 9%.

Pharmaceutical companies edged higher on the hopes of higher sales of anti-viral drugs to governments. Roche Holding AG gained 3.3% in Zurich trading and GlaxoSmithKline PLC gained 5.4% in London trading.

Glaxo makes Relenza and Roche sells Tamiflu and government agencies and World Health Organization is looking to diversify their inventory of flu treatment drugs.

The British pound declined 0.5% against the U.S. dollar and 1% against yen after former UK Treasury adviser Roger Bootle worried that the Britain may face severe contraction in the economy on persistent weakness in home prices.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 18.35 or 0.21% to 8,726.34, Hang Seng index in Hong Kong decreased 418.43 or 2.74% closed to 14,840.42, CSI 300 index in China lower 59.60 or 2.32% closed to 2,513.29. ASX 200 index in Australia increased 19.30 or 0.52% closed to 3,731.60. The KL Composite index in Malaysia lower 12.56 or 1.27% closed to 980.12.

The Kospi Index in South Korea decreased 14.27 or 1.05% to close at 1,339.83. SET index in Thailand closed higher 0.92 or 0.19% to 474.99 and JSE Index in Indonesia decreased 15.26 or 0.96% closed to 1,576.08. The Sensex index in India increased 42.80 or 0.38% closed to 11,371.85.

Europe Markets Review

In London FTSE 100 Index traded lower 30.95 or 0.74% to 4,125.04, in Paris CAC 40 Index decreased 39.59 or 1.28% to 3,063.26 and in Frankfurt DAX index traded lower 53.53 or 1.15% to 4,620.79. In Zurich trading SMI decreased 25.19 or 0.49% to 5,087.86.