Global Stocks Slip on Signs of Coronavirus's Economic Impact

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Japan's February manufacturing activity shows sharpest deterioration in more than seven years

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

Futures tied to the S&P 500 index fell 0.3%. The pan-continental Stoxx Europe 600 was largely flat, 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.

The figures also showed longer delivery times from suppliers to Germany. While this usually indicates more demand for goods, investors see it now as a result of the shutdown in Chinese supply chains and an indication that the coronavirus is weighing on the German economy, she said.

"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."

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The yield on 10-year Treasurys has traded below the 3-month yield since Tuesday as investors seek longer-duration U.S. bonds as a safe investment amid coronavirus fears, said Andrey Kuznetsov, a senior credit portfolio manager at Hermes Investment Management.

"If we are in an environment when we will see a lower-than-expected growth on the back of coronavirus, this will increase demand for low-risk assets," he said.

Brent crude, the global benchmark for oil, slid 1.8% to $58.24 a barrel amid fears that the epidemic will pare demand.

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.

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