Asian equity markets have been sold off overnight on concerns that the coronavirus is spreading more rapidly than initially thought. The World Health Organisation has called an emergency meeting as 224 cases have been confirmed and a 4th death from the outbreak.

If you go back to 2003, the SARS virus history tells us that risk markets do not like unconfined viruses as this creates panic (and risk-off tones) in the markets. So, overnight Asian equity markets saw selling with the Hang Seng down more than -2.5% and the Nikkei down -0.91%. In the 2003 SARS virus outbreak, the MSCI Asia Pacific Index sold off steadily as the SARS outbreak got worse. We are expecting a similar response here with the latest outbreak of the coronavirus as new cases sadly appear.

Alongside falling equities here is what to expect on risk-on and risk-off currency flows depending on the details of the deal today:

• Risk-on flows = AUD, NZD, CAD buying, and JPY, CHF selling
• Risk-off flows = JPY, CHF buying, and AUD, NZD, CAD selling