| Welcome to your morning markets update, delivered every weekday before the European open. Good morning. A viral outbreak in China is already affecting markets, the latest European earnings season and the economic summit in Davos get going and U.K. unemployment is today's key data point. Here's what's moving markets. China Pneumonia A new market risk has emerged in the form of a coronavirus outbreak in central China, with the death toll reaching four and multiple medical workers infected. The illness drove Asian stocks lower amid fears over person-to-person spreading just as hundreds of millions of Chinese begin their Lunar New Year travels. Investors on this continent are still trying to gauge the potential impact, but shares of European luxury-goods makers with large Chinese exposure were a notable weak spot on Monday. Europe's Results European earnings are getting going today, with Switzerland's UBS Group AG missing on full-year profit and cost targets and reducing its mid-term goals, while London- and Sydney-listed mining giant BHP Group Plc announced it's on track to increase iron ore output this year. Coming up, the consumer sector gets a report from posh suit maker Hugo Boss AG and EasyJet Plc shareholders will hope that the budget airline's numbers are as strong as those reported by peer Ryanair Holdings Plc this month. Duels in Davos Donald Trump may bump into an adversary in Davos today, with teenage activist Greta Thunberg due to attend the World Economic Forum in the Swiss Alps on the same day as the U.S. president. Climate change is expected to be one of the subjects debated in the snow, while another topic on leaders' lips may be the optimism of the International Monetary Fund, whose latest economic growth report highlighted signs that the slump in manufacturing and global trade may be nearing a bottom. From the environment to billionaires, these are the Davos numbers. France-U.S. Relations Trump and French President Emmanuel Macron agreed to a truce in their dispute over digital taxes that means neither France nor the U.S. will impose punitive tariffs this year, according to a French diplomat. After talking by phone, the two leaders congratulated each other on Twitter, though a readout of their chat was notably more muted, and neither a White House spokesman nor officials with the U.S. Trade Representative's office would confirm that the U.S. had called off Trump's announced tariffs. Still, the possible respite may defuse transatlantic tensions somewhat, just in time for some skiing, perhaps. Coming Up… U.K. unemployment could be Tuesday's key data point, amid mounting bets on an interest rate cut from the Bank of England next week. One firm not waging on more stimulus is JPMorgan, which expects the central bank to remain on hold all year. BoE Governor Mark Carney is due to speak in Davos today, while also note that the Bank of Japan left its rates as they were earlier, and in other data, we'll get a reading of Germany ZEW investor expectations. What We've Been Reading This is what's caught our eye over the past 24 hours. And finally, here's what Cormac Mullen is interested in this morning Asia traders were shaken awake from their U.S.-holiday induced slumber by a sharp sell-off in Hong Kong shares at the open Tuesday, which quickly spread to other risk assets and pushed havens the yen and Treasuries higher. The move took many by surprise but eventually analysts settled on concern about the worsening China virus situation as behind the move. There is likely more to it than that, with the depth and speed of the sell-off suggesting some sort of program trade on the open, but it's hard to fault the logic of those who wanted to take profits on their Chinese equity positions. A new, mysterious and potentially fatal coronavirus coinciding with the biggest annual human migration in the world just before Chinese markets shut for an extended lunar new year holiday sounds like a perfect excuse to take some money off the table. Moves in other markets were less severe with strategists dusting off their playbooks from the SARS outbreak in 2003 and adjusting their models accordingly. While the immediate impact of that outbreak was devastating in terms of the human cost, as well as on the economy and financial markets, in epicenters such as Hong Kong the rebound was almost immediate. That seems to be the expectation for the current epidemic but the situation remains fluid and traders are scrambling to add Viral Pathogenesis to their newly earned degrees in History of the U.S.-Iran Conflict, Game Theory in Trade Relations and Advanced Valuation in an Environment of Accommodative Monetary Policy.  Cormac Mullen is a Cross-Asset reporter and editor for Bloomberg News in Tokyo. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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