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Weekly comment: Is coronavirus or its impact spreading beyond China?

Weekly podcast: Markets Uncut

Is coronavirus or its impact spreading beyond China? Join Richard Carter and Sebastian Scott on Quilter Cheviot’s Markets Uncut podcast to find out more. Plus, Matt Ennion, our UK fund analyst on Woodford and the ramifications on the wider UK investing scene.

Download the transcript

If you want further insight on investing in the UK out of the EU,  watch our February webinar here.

Market overview: Alan McIntosh, Chief Investment Strategist

Despite the number of deaths from coronavirus now exceeding fatalities linked to SARS, global stock markets rebounded sharply last week, making up for much of the fall experienced in the previous fortnight. While this may seem perverse, there is an inherent assumption that the virus will shortly be contained and that the economic impact will be minor.

In truth, it is too early to tell. With much of China in lockdown, there is an immediate impact on manufacturing and consumption, both within and outside the country. Some factories are due to return to work today, but many won’t. There will be an impact on GDP this quarter which some estimate at between 1-2%.

However, the second order effects on other countries are more difficult to calculate in that they involve the movement of components as well as finished goods. Market optimists are taking the view that any impact will be temporary and activity levels will return to normal after a brief lull. While this may be true, timings and magnitude are nothing more than estimates at present.

Donald Trump had arguably the best week of his presidency so far. He was acquitted by the Republican-led Senate on impeachment charges, although this was not hugely surprising (no US president has successfully been impeached). It also coincided with a bumper set of employment numbers and a stock market that hit a fresh all-time high. Nearly 60 percent of Americans believe they are financially better off than a year ago – a record number. With no clear front runner in the Democratic leadership challenge as of yet, the next US presidency is Trump’s to lose.