Global Stocks Fall on Signs of Coronavirus's Economic Impact - The Wall Street Journal

Traders work on the floor of the New York Stock Exchange.
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Caitlin Ostroff

The Wall Street Journal

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@ceostroff
caitlin.ostroff@wsj.com

Feb. 21, 2020 5:20 am ET

Global stocks fell Friday as early signs of the coronavirus outbreak curtailing economic growth in some markets and evidence that the epidemic is claiming more lives outside China soured the outlook.

Futures tied to the S&P 500 index fell 0.4%. The pan-continental Stoxx Europe 600 ticked down 0.1%, while Hong Kong’s Hang Seng Index closed down 1.1%.

Investors may be underestimating the impact of the outbreak on U.S. companies’ earnings as economic activity slows in China and tourism takes a hit, Goldman Sachs Group warned. More than 75,000 people have been diagnosed with coronavirus, and over 2,000 have died globally. South Korea reported its first fatality, while two patients in Iran also died and confirmed cases began to climb in Beijing.

Preliminary figures for Japan’s February manufacturing activity meanwhile showed the sharpest contraction in more than seven years, Deutsche Bank said. Data on the country’s services sector fell to the lowest since April 2014 as the spread of coronavirus hurt tourism, according to IHS Markit.

While German figures for manufacturing showed slight improvement, it may be still too early to capture the impact of the coronavirus, said Aila Mihr, a senior analyst at Danske Bank Research. New export orders pointing to how many German goods are being purchased from countries including China remained weak.

“In the grand scheme of things, we kind of read them as the calm before the storm,” Ms. Mihr said. “We don’t think we have seen the worst yet.”

Investors reached for haven assets, pushing up the Japanese yen 0.3% against the U.S. dollar and gold up 0.9%. The yield on the 10-year Treasury fell to 1.481%, from 1.524% on Thursday.

Later in the day, preliminary figures for February’s manufacturing and services activity in the U.S., as well as existing home sales data, are due to be released.