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Passenger airlines, shipping, lodging, restaurants, gaming, and retail will be hardest hit by coronavirus-related market chaos in the short term, according to a new Moody’s report.
Grocery stores, packaging, and telecommunications will survive relatively unscathed, Moody’s found.
The report mapped two scenarios: A quick recovery that hurts 16% of US companies; and a prolonged virus impact that hurts 45%.
If the virus’ impact spills into the second half of the year, oil and gas could be hit hard because of reduced mobility.
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The coronavirus crisis will clobber airlines, shipping, hotels, and restaurants, while largely sparing grocery store chains, packaging, and telecommunications, Moody’s Investors Service says in a new global report.
In a baseline scenario, the virus will hurt around 16% of US companies, Moody’s said, but in a downside scenario, that figure will jump to about 45%.
"Sectors reliant on trade and the free movement of people are most exposed," said Benjamin Nelson, a Moody’s vice president and co-author of the report. "Recession risks are rising as coronavirus spreads around the world."
Carmakers, gaming, and retail will be hit hard by supply chain disruptions, the analysts said — Sony and Microsoft are both preparing new video game consoles for release later this year, for instance, but that release window may be imperiled by the shutdown of Chinese factories amid the coronavirus crisis.
Moody’s said its baseline scenario assumes coronavirus infections rise through the second quarter, but monetary and fiscal measures help support the global economy later in 2020.
Under the downside scenario, monetary and fiscal stimulus can’t buoy the global economy, and key economies fall into recession. Oil and gas, manufacturing, and chemicals struggle more in that case.
"A lengthy outbreak would affect economic activity for longer, leading to heightened recessionary dynamics and a more significant demand shock," Moody’s said. "A sustained pullback in consumption would hurt corporate earnings, prompt layoffs, and weigh on consumer sentiment."
Moody’s members can see more from the report here.
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Investors find this market crash hard to understand because it is fundamentally different from previous crashes in that it has been engineered on purpose to fight COVID-19. That also opens the way for a swift recovery once the spread is contained.
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