By Kate Gibson
The spread of swine flu had stock analysts on Monday drawing
comparisons to the 2003 outbreak of Severe Acute Respiratory
Syndrome, or SARS, but they also downplayed the idea of major
market disruption from the latest outbreak.
"Swine flu has the potential to become a significant global
market mover if it were to develop into a global pandemic. However,
it is still too early for this," said Lars Christensen, chief
analyst, Danske Bank.
On Wall Street, U.S. stocks vacillated as better-than-forecast
results from Humana Inc. (HUM) and General Motor Corp.'s (GM)
strategy to trim $44 billion in liabilities helped in neutralizing
worries that swine flu would dent the economy. In early afternoon
trade, the Dow Jones Industrial Average (DJI) stood at 8,083.70, up
7.41 points. The S&P 500 Index (SPX) was virtually flat to
stand at 865.34, while the Nasdaq Composite (RIXF) also held steady
at 1,695.07.
The deadly outbreak that has killed more than 100 people in
Mexico has spread to the United States, where 20 Americans have
caught the disease, and to Canada, where six people are infected.
.
"Over the coming weeks swine flu is likely to either fade away
as a market theme or escalate into an all-consuming market driver
depending on whether or not it develops into a pandemic in the U.S.
and/or other industrialized countries," said Christensen, who noted
significant drops among airline stocks on fears the flu might
reduce international travel and trade activity.
Disrupting travel, trade and the workplace, the SARS outbreak in
2003 lasted six months and killed 775 of the 8,000 people infected
in 25 countries.
It had a significant, albeit short-lived negative impact on
Asian financial markets, though the global economic impact of SARS
proved quite limited, the analyst noted.
"At this stage, it is near impossible to assess the global
macro-economic impact of swine flu, but our main scenario is that
the impact will be relatively limited, as was the case with SARS in
2003," said Christensen.
"We are sympathetic to the idea recalling the impact of bird flu
on Asian GDPs during that scare and so understand the market's
temperament with the initial headlines about various cases being
found in the U.S.," said David Ader, U.S. government bond
strategist at the Royal Bank of Scotland.
The Asian Development Bank said SARS cost East and Southeast
Asia $18 billion or 0.6% of GDP - 2.6% for Hong Kong, and 2% for
Singapore for the first part of 2003, said Ader.
"The concern is that the flu becomes a very serious and
disruptive pandemic. The last major flu pandemic scare was SARS. We
expect some food export restrictions until this flu attack clears,"
Frederic Dickson, chief market strategist at D.A. Davidson &
Co.