Coronavirus impact on financial markets and economies

By Ritvik Carvalho

LONDON (Reuters) - Financial markets appear to be recovering from the damage done in late January by the coronavirus outbreak in China.

Below are six charts showing the effect on financial markets, the projected economic impact and comparisons with the SARS outbreak.

1) STOCKS STABILIZE AS DISEASE CASE GROWTH SLOWS

Stocks across the world fell as fears about the potential impact of the coronavirus unnerved investors, but central bank intervention and expectations that cases of the virus would plateau at some point aided a recovery in recent days.

So far, a total of 565 deaths and 28,353 cases of the virus have been confirmed, according to a real-time tracker developed by Johns Hopkins University https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6.

(Graphic: Stocks stabilize ahead of crest in reported virus infections - https://fingfx.thomsonreuters.com/gfx/mkt/13/1792/1761/stocks.png)

2) WINNERS AND LOSERS

The outbreak has benefited pharmaceutical stocks, particularly in China. Tourism and travel-related stocks such as hotels, airlines, luxury and consumer goods have suffered.

Hong Kong carrier Cathay Pacific, for example, plans to cut a third of its capacity over the next two months, including 90% of flights to mainland China. It has encouraged its 27,000 employees to take three weeks of unpaid leave in a bid to preserve cash.

(Graphic: Asian stock beneficiaries - https://fingfx.thomsonreuters.com/gfx/mkt/13/1794/1763/stock%20beneficiaries.png)

3) CENTRAL BANK STIMULUS

China's central bank stepped in earlier this week to inject some $174 billion of liquidity into markets and reduce reverse repo rates.

Reuters reported that Chinese policymakers were readying measures to support the economy. Sources said the government is debating whether to lower the planned 2020 economic growth target of around 6%, which many private-sector economists see now as well beyond China's reach.

For an interactive version of the chart, click here https://tmsnrt.rs/2tE3AZG.

(Graphic: Asian stock laggards - https://fingfx.thomsonreuters.com/gfx/mkt/13/1793/1762/stock_laggards.png)

4) ECONOMIC HIT

Banks and asset managers have begun forecasting the potential impact the coronavirus could have on the global economy. Most project it will reduce global gross domestic product by 0.2 to 0.3 percentage points.

For an interactive version of the chart, click here https://tmsnrt.rs/2v4GETu.

A Reuters poll predicted that Chinese exports and imports fell in January after a brief recovery at the end of last year. Analysts expected the virus outbreak could disrupt China's global trade for months to come.

Many forecast significant damage to Chinese growth in the first quarter and expect purchasing managers' indexes to nosedive in February. However, some are optimistic a rebound could come as early as the second quarter.

"Our scenario assumes that the spread of the virus slows down in February and is contained by March/April," strategists at Danske Bank predicted in a note to clients. "While there are early signs of a slowing spread of the disease, uncertainty relating to our predictions is very high."

Chinese retail sales data and Hong Kong's PMIs during the outbreak of SARS -- Severe Acute Respiratory Syndrome -- in 2003 showed that both indicators fell during the spread of the disease, then recovered shortly after it was contained.

(Graphic: China central bank pumps liquidity into markets - https://fingfx.thomsonreuters.com/gfx/editorcharts/GLOBAL-MARKETS-VIRUS/0H001R89FBS6/eikon.png)

(Graphic: Potential impact of coronavirus on 2020 global GDP - https://fingfx.thomsonreuters.com/gfx/editorcharts/GLOBAL-MARKETS-CORONAVIRUS/0H001R891BQZ/eikon.png)

(Graphic: Catch up effect - https://fingfx.thomsonreuters.com/gfx/mkt/13/1795/1764/CATCHUP.png)

(Reporting by Ritvik Carvalho; editing by Larry King)