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A paramilitary police officer wearing a protective facemask to help stop the spread of the Corona virus, which originated in the central city of Wuhan. Image Credit: AFP

Dubai: As fears of a rapidly-spreading deadly virus continued to haunt markets worldwide, analysts foresaw another week of declines amid a new spate of earnings reports.

Major Wall Street indices ended the week trading in the red, with the Dow Jones, the S&P 500 and Nasdaq all declining over 1 per cent. Asia stocks had the most to lose, with over 3 per cent in declines seen in Hong Kong and China indices.

But the sell-off is not expected to end there.

The bad news is that the worst has yet to come, as the number of new infections is still on the rise.

- Larry Hu, economist at Macquarie Capital

The new respiratory illness in China, a coronavirus, worsened over the weekend — so far sickening more than 1,975 people and killing 56.

“The bad news is that the worst has yet to come, as the number of new infections is still on the rise,” warned Larry Hu, economist at Macquarie Capital.

However, the majority of the deaths are in Wuhan, where the outbreak first originated, indicating that lockdown measures taken by the Chinese government have paid off for now.

Analysts said markets were seeking more answers about how the disease is contracted or how it can be treated, while adding that investors should be prepared for buying opportunities in a week.

“Going forward, sentiments will continue to remain weak as investors wait for more developments to emerge to gauge the real impact of the coronavirus disease outbreak on the broader economies,” said Iyad Abu Hweij, managing director at Allied Investment Partners.

Another earnings rush

The illness could eclipse what is seen as the busiest week of corporate results, as the fourth-quarter earnings season gathers steam. With 74 companies in the S&P 500 having reported so far, nearly 70 per cent of them have beat expectations.

Many names are expected to report this week, with Apple, Starbucks seen reporting on Tuesday; Boeing, General Electric, Facebook, Microsoft on Wednesday; Amazon, Coca-Cola on Thursday and Exxon Mobil, Chevron on Friday.

However, the recent rush of corporate earnings reports, while beating Street estimates in many cases, have failed to impress investors. Fourth-quarter earnings were now seen contracting 0.7 per cent from a year ago.

Day of declines in GCC

For regional markets, developments across global markets will continue to influence trading activity, but sentiment will largely be dominated by fourth-quarter 2019 earnings announcements during the week, Abu Hweij said.

Emirates NBD, First Abu Dhabi Bank and Dubai Islamic Bank are expected to report earnings in the UAE this week, while SABIC and Maaden should disclose their reports in Saudi Arabia.

Gulf Indexes

Most of the Gulf indices were trading in the red on Sunday, with Dubai’s main index down 0.58 per cent while Abu Dhabi’s ADX General Index shed 0.3 per cent.

“Many countries in the Mena region remain fraught with social unrest, with Lebanon, Iran and Iraq in particular undergoing particularly difficult times,” said Khatija Haque, head of Mena research at Emirates NBD.

“With government budgets under pressure, it is unclear how the respective administrations will be able to placate their protesters while keeping investors on side.”

Saudi Arabia’s Tadawul All-Share Index slipped 0.7 per cent, Kuwait’s stock market fell 0.4 per cent while the QE Index in Doha dropped 0.3 per cent.

Israel’s main index dipped 0.8 per cent, the most in the region, ahead of US President Donald Trump’s planned release of a Middle East peace proposal.