In yesterday’s Daily Markets note, your authors shared that as equity markets looked to shrug off the mounting coronavirus news, our suspicion that we had yet to see the real fallout on economic growth and earnings expectations. It would seem we were correct in that thinking. Overnight economists updated their forecasts in an attempt to size up that potential economic impact, and it is weighing on global equities. With more than 7,700 people being infected by the virus and the World Health Organization saying the spread of the virus outside of China is a “grave concern,” one Chinese economist estimated the virus could hit China’s GDP by 1-5% while economists from Nomura shared the “outbreak could cause China’s real GDP growth to shrink to below 4% from the 6% pace.” We suspect these are only the first few revisions to be had in the coming days.
Below in today’s note, we call out various companies who have announced changes to their operations as a result of the virus below, but we’d like to point out that the sheer magnitude of work that is being put on hold cannot help but have an impact on global supply lines as well. Add this to the impact of the ongoing trade war and you have some material headwinds to global growth.
- Hershey Foods (HSY), Microsoft (MSFT), Northrop Grumman (NOC), Raytheon (RTN), UPS (UPS), and Verizon (VZ) are constituents in Tematica Research’s Thematic Dividend All-Stars Index.
- Tesla (TSLA) is a constituent in Tematica Research’s Cleaner Living Index.
- Proofpoint (PFPT) is a constituent in the Foxberry Tematica Research Cybersecurity & Data Privacy Index.