Will the Fed get the better of the coronavirus? 05-03-2020

Coronavirus continues its world tour

The coronavirus broke out in China at the end of 2019. The repercussions for the global economy seem limited at first sight, but the virus spreads at a rapid pace.

In the meantime, China seems to have things under control and economic life there is picking up again.

It's a different story in the rest of the world, where the number of infections continues to rise.

Are the markets overreacting?

Growth has come to a temporary standstill in Europe, with Italy and Germany, in particular, suffering most at present.

Companies are issuing profit warnings. Economic forecasts are being slightly adjusted.

Stock markets remain extremely jittery. The US central bank has decided to play it safe and has cut interest rates by 0.5%.

We're keeping a cool head

We expect the economy to recover in the second half of the year and to regain most of the ground lost.

Stay invested. We are closely following developments and are making adjustments when and where necessary.

Dirk Thiels, Senior Investment Strategist KBC Asset Management
'The stock markets seem to have overreacted. The impact on the economy and company earnings will mostly be a temporary one. Improved figures are likely to follow in the second half of the year.'

Editing ended on 5 March 2020. This document is a publication of KBC Asset Management NV (KBC AM). The information in it can be changed without notice and offers no guarantee for the future. Nothing in this document may be reproduced without the prior, express, written consent of KBC AM. This information is governed by the laws of Belgium and is subject to the exclusive jurisdiction of its courts.