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Capital market impact

Capital market impact

Equity markets beginning to reflect coronavirus threat

Equity markets are beginning to catch up with bond and commodity markets in concern around the coronavirus outbreak, though a substantial divide remains. The outbreak is spreading beyond China (including Japan, South Korea and Italy), which raises the prospects for a drag on global growth. It is difficult to estimate the impact due to the uncertainty surrounding the scope and duration of the impact. 

Capital market impact

Equity investors adopt “glass half full” mindset

Markets are showing remarkable resiliency given the uncertainties surrounding the coronavirus outbreak. The global economy has been showing signs of stabilization, but the unclear duration and magnitude of the disruption is a risk. Equity markets have chosen instead to focus on the supportive fundamentals. Earnings have reached an inflection, showing slight growth in the fourth quarter versus the expectation of a decline.  

Capital market impact

Equity markets are resilient despite coronavirus spread

Equity markets saw a sharp rebound to record territory last week, as investor focus shifted from coronavirus fears to an improving macro landscape. The earnings inflection continues to develop, with the fourth quarter now trending to grow versus a year ago versus a decline of 2% expected at the beginning of the year. Looking ahead, analysts see earnings growth of 2.5% to 5% for Q1 2020 and Q2 2020.