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Traders work on the floor of the New York Stock Exchange (NYSE) in New York. Global markets are seen pressured this week amid growing concerns on the deadly virus’ spread outside China. Image Credit: REUTERS

Dubai: Global markets are seen pressured this week amid growing concerns on the deadly virus’ spread outside China.

Sentiment had briefly eased last week after evidence mounted that the contagion was slowing in epicenter China, but a spike in number of cases in other countries set-off panic-selling in the markets.

“With the markets less confident of a ‘peak virus’ moment, while questioning the numbers or methodology used by authorities in Hubei, not to mention the continually shifting goal post, things are looking mighty disheveled,“ wrote Stephen Innes, chief market strategist at AxiCorp.

“And given the rapid increase in the cases reported in Korea, and the continued drift higher in mortality rates in China, the market has switched back into fear mode.”

All three major indexes on Wall Street posted their first weekly losses so far this month, with the key pan-European Stoxx 600 and MSCI Asia Pacific indexes mirroring similar declines elsewhere.

First signs emerge

The first signs emerged of a probable virus-triggered economic impact after news from companies about supply-chain disruptions impacting revenue, and analysts say this has definitely weighed on sentiment.

The number of companies that have lowered their guidance on profits for the first quarter is still in line with past years. But Apple’s surprise update this week that it wouldn’t hit its revenue target has put investors on edge.

“It took Apple to do what the coronavirus couldn’t – make stocks feel a little queasy. While the market seemed to absorb the initial apple shock in its typically pleasant manner, but it’s the aftershocks when corporate America starts waving the warning flags in tandem that could prove to be the biggest gut check,” Innes added.

Time for correction

Even as the fast-spreading virus triggered a worldwide sell-off in January, the losses proved short-lived as global equities are trading near record highs on optimism that the impact from the contagion will be limited.

However, analysts at investment bank Goldman Sachs cautioned to clients this week that investors may be underestimating the negative impact of the coronavirus on corporate earnings, which poses a threat to the stock market rally,

A near-term correction, in which the market slides at least 10 per cent from a recent peak, is looking much more probable, the analysts wrote, while adding that equity markets look “increasingly exposed” to disappointing earnings growth due to the new coronavirus outbreak.

The growing coronavirus worries reignited appetite for safe-haven assets, with gold soaring past $1,600 level and hitting fresh seven-year highs.