Only a week ago most global share markets, including ours, hit record highs. At the time of writing the losses as a result of the coronavirus outbreak amount only to our 2020 gains so far. What's unclear, of course, is how widely the coronavirus will spread and how much damage it will do, leading to uncertainty in financial markets across the world.

However, it is worth noting that last year the market volatility was hugely consumed by the trade war between the United States and China, which could have resulted in catastrophic consequences.

What happens from here? In my opinion, if the outbreak is not resolved soon central banks globally will step in, so you will see countries providing stimulus in the form of interest rate cuts, tax cuts and monetary policy reform.

But lower interest rates won't make a sick person well, or give public health authorities confidence that businesses can reopen. All interest rate cuts can do is lower borrowing costs and help encourage businesses and consumers to spend.

The closest thing we have to a blueprint for the impact that an outbreak like this can have is the SARS outbreak of 2003, when a rush to reduce risk by investors prompted significant market falls. 

So far, the reaction to the Coronavirus outbreak is similar, but whether it follows the same pattern as SARS – which had a relatively short-lived impact on markets – really depends on how widespread the outbreak becomes.

For now, the only template we have is how the SARS outbreak impacted stock and currency markets. Initially, the commodities index fell 7.6% in March 2003 as SARS became known globally, but the market had largely recovered by late June the same year when the World Health Organisation declared that SARS was under control.