It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Some features of ATS will be disabled while you continue to use an ad-blocker.
(visit the link for the full news article)
LONDON, April 2* (Reuters) - The World Health Organization (WHO) has declared a "public health emergency of international concern" over an outbreak of swine flu in Mexico. [ID:nFLU]
International experts will convene on Monday at around 1400 GMT to advise the WHO on whether to raise the current pandemic alert level for swine flu from 3 in its six-step approach.
The following are the WHO definitions of the different levels of alert and possible consequences for financial markets at each level in the case of swine flu.
LEVEL 2 - animal influenza virus circulating among domesticated or wild animals is known to have caused infection in humans, and is considered a potential pandemic threat.
- Financial market impact confined to specific firms or sectors in countries directly affected by outbreak
LEVEL 3 - an animal or human-animal influenza reassortant virus has caused sporadic cases or small clusters of disease in people, but has not resulted in human-to-human transmission sufficient to sustain community-level outbreaks.
- Market impact limited to short-term swings lasting a few days though further jolts to financial asset prices could be seen if governments or major forecasters cut growth predictions.
- Global equity markets suffer moderate setback, with underperformance in particular sectors (transport, travel, leisure, and commodity shares) that are seen most vulnerable to further deterioration in trade flows, travel.
- Minor flows into the most liquid bond markets, causing moderate declines in yields in these markets.
- Dollar, yen benefit from investors' move into safe havens, with emerging market currencies and higher-yielding ones (such as the Australian and New Zealand dollars) losing ground as investors unwind carry trades put in place in recent weeks as stocks markets have rebounded.
- Gold gains
LEVEL 4 (current) - characterized by verified human-to-human transmission of an animal or human-animal influenza reassortant virus able to cause community-level outbreaks.
- Concern about the impact on global economic activity starts to weigh on the wider equity market. Mark Bon, fund manager at Canada Life in London, estimates an upgrade to level 4 would see stock markets suffer a sudden sharp drop of 7 percent. Relative performance of stock markets could be determined by their economies' exposure to infected countries and by their stock piles of relevant drugs and vaccines.
- Further flight to the most liquid bond markets, with curve steepening seen on the cards as investors are expected to favour the front end and cash-like short-term bills. David Keeble, head of fixed income research at Calyon in London, says any WHO upgrade of the alert level could see 10-year Bund and Treasury yields fall about 20-30 basis points within days of such move.
- Yen and dollar expected to continue to strengthen, particularly against higher-yielding currencies as above. Any concern about renewed stress in the financial sector will stoke speculation cash could be pulled back to the United States to bolster balance sheets in a rerun of what happened during the financial crisis.
LEVEL 5 - characterized by human-to-human spread of the virus into at least two countries in one WHO region. While most countries will not be affected at this stage, the declaration of Phase 5 is a strong signal that a pandemic is imminent.