Bottom line: Numbers keep getting worse in the US and most of Europe, while there are signs of slowdown in Italy and better news from Iran, Japan and South Korea. It will likely get worse in the short term, not least in the US, and we could hit some very high numbers. Eventually lockdowns will work to slow contagion but for the US it is probably two weeks away at least.

The number of new cases outside China jumped higher to 26,428 from 20,657 yesterday. Some 70% of the rise happened in Europe and 20% in the US. China again reported no new cases in Hubei.

We keep raising the model scenarios, as it is clear that the fairly slow response in Europe and the US means the exponential phase will be longer and stronger. The numbers suggest we could move above 1 million cases outside China within a month, from the current level of 165,000.

The US saw a 50% jump in registered infections to 14,340, as 4,882 new cases were found. The big rise is likely related to the increase in testing, as we also saw a further decline in the death rate to 1.5% from 1.6%. However, it also reflects that the US is in the exponential phase of the outbreak, where the daily percent increase is high. California yesterday imposed a lockdown and we could soon see the same in many other states. The US is now on a steeper path than Italy but it is partly natural as the population is five times bigger and more infection chains can get started.

In Italy, the number of new cases rose to a new high of 5,322 from 4,207 yesterday. This is a bit of a set-back compared to the signs of stabilisation a few days ago. However, it could be related to more intensive testing as growth in the number of new deaths has slowed down, which would point to some improvement. Unfortunately, we cannot know for sure but the coming days should tell us if we there has been some improvement. This would be natural given that the lockdown has been in place for 11 days. The number of deaths now exceeds the deaths in Hubei province where the outbreak of COVID-19 began.

In Germany, the number of infections continues to rise around 25%, a worryingly high speed, which implies a doubling in three days. The number of new cases was close to 3,000, taking the total to 15,320. Germany has been fairly slow to impose restrictions and this is likely why the virus continues to show a rapid rise. It is now on a steeper path than Italy, partly also due to a bigger population.

France has seen a bit slower development than Germany, but has also responded with tougher measures with the implementation of a lockdown five days ago. Spain, which has also imposed a lockdown, is also seeing a somewhat lower growth rate at 22%. However, as in Italy, the number of deaths is increasing quite fast, which could be related to the fact that young people live with their parents for longer in these countries. Older people thus have more human contact than in Northern Europe, where death rates are much lower and rising more slowly.

There are also some positive signs in the numbers when we look to South Korea, Iran and Japan, which all saw the outbreak earlier and took strong measures to stop it. In South Korea, the number of new cases is lower again after a small rise in previous days. In Iran, the growth rate has slowed to 6% and the number of new deaths looks like it is peaking. Japan has also seen a considerable slowdown again after some acceleration 10 days ago. The cases in these countries serve as an illustration that when measures are taken and people get scared, the contagion slows quite fast. However, it takes two weeks to show in the numbers due to the time of incubation and once symptoms are severe enough to get tested.

Equity markets stabilised overnight, partly helped by a rise in oil prices.  S&P500 closed ½% higher yesterday and the futures is up 2.5% overnight. Asian stocks are up across the board with Korean stocks outperforming with a rise of 7%.

 Comment: It seems clear it will continue to get worse before it gets better. In the next weeks, we are likely to see some very high numbers in the US and Europe. From when tough measures are taken until the effects are seen it takes 10-14 days, as experienced in South Korea, China and Iran. However, it will eventually work to slow the contagion and we are likely to see more improvement in Italy very soon, in my view. The rest of Europe will follow with a lag of about a week. With the lockdown of California, we have seen the first steps of tough measures in the US but, again, it takes two weeks to see the effect. For markets, it may be taken as a positive development, though, if Italy sees an improvement soon.


Read the full article on Danske Bank's research site