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Australian market expected to open lower 05/02/20

Australian market expected to open lower 05/02/20, FP Markets

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract expected to open up 43 points.

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Overnight Summary

EACH MARKET IN FOCUS

Australian Market

The Australian share market recovered from an early stumble to close 0.4% higher at 6948.7.

The heavyweight materials sector was a drag early on following overnight declines in metals prices, but rallied to close 0.3% higher and join most other sectors in the black.

Fortescue Metals rose 1.5% while Rio Tinto gained 0.5% and BHP inched 0.2% higher. The strongest performing sector was consumer staples, up 1.2%. Consumer discretionaries rose 0.8% as analyst upgrades helped Harvey Norman and JB Hi-Fi gain 5.9% and 3.5%,
respectively.

The energy sector, weighed by lower crude-oil prices, fell 1.2%. The benchmark S&P/ASX 200 is off 2.7% from its Jan. 22 intraday record.

US Market

U.S. stocks climbed intraday on expectations that global growth will prove resilient as fiscal and monetary policies blunt the impact of the coronavirus outbreak on China’s economy.

The Dow Jones Industrial Average jumped 450 points, or 1.6%, returning to positive territory for the year after deep losses Friday. At its peak, the blue-chip index was up slightly more than 500 points.

The S&P 500 advanced 1.6%, and the tech-heavy Nasdaq Composite added 2%, putting it on pace for a new record close.  The gains marked the fourth time the S&P 500 has moved by more than 1% in seven trading sessions. The upsurge in volatility follows several months of unusual calm in the stock market. Investors attribute the big moves to the uncertainty about how the outbreak in a
vital economic center will ripple through global business, as well as to the elevated levels stocks had reached after standout returns in 2019.

Commodities

Gold futures settled lower, pushing prices to their lowest finish in more than two weeks.  Strength in the U.S. stock market, as well as bond yields, drove investment interest away from the precious metal for a second straight session. April gold fell $26.90, or 1.7%, to settle at $1,555.50 an ounce. That was the lowest most-active contract settlement since Jan. 16, according to FactSet data.   In other commodity markets, March wheat prices rose 1 3/4 cents to $5.57 1/4.

Oil Futures

Oil futures gave up earlier gains to finish with a loss, with U.S. prices below $50 a barrel for the first time in more than a year, as demand worries continue to plague the market.

Prices fell even as the Organization of the Petroleum Exporting Countries and its allies considered deeper production cuts to stem a coronavirus-inspired tumble in the commodity that entered a bear market a day ago.

West Texas Intermediate crude for March delivery lost 50 cents, or 1%, to settle at $49.61 a barrel on the New York Mercantile Exchange, a day after it entered a bear market, down 20.8% from its recent high of $63.27 on Jan. 6, according to Dow Jones Market Data. A decline of at least 20% from a recent peak is the traditional definition of a bear market. The settlement was the lowest since Jan. 7, 2019.

Forex

The WSJ Dollar Index was recently up 0.05% to 90.97.

European Markets

In Europe, the Stoxx Europe 600 recorded a gain of 1.6%.  The FTSE 100 closed up as traders take their cues from China, where stocks rebounded from Monday’s losses. The market was also assisted by a rebound in oil and copper, as well as energy and mining stocks which showed strong gains. The pound rose modestly against the dollar after Monday’s sizeable drop as it benefited from short covering and
bargain hunting.

The French CAC-40 Index ended 1.76% higher at 5935.05 while the German DAX ended 1.81% higher at 13281.74.

Asian Markets

In Asia, the Nikkei Stock Average closed up 0.5% at 23084.59, turning positive despite opening lower.
Investors will likely continue to monitor developments on the coronavirus outbreak, following reports that Japan had quarantined a cruise ship carrying 3,500 people and was testing passengers for the virus.

South Korean stocks closed higher, largely driven by bargain hunting in tech and chemical stocks. The benchmark Kospi rose 1.8% to 2157.90 as investors picked up cheap shares after recent declines due to the coronavirus outbreak. The World Health Organization’s advice to not panic with regard to the virus helped lift the gloomy sentiment.

Hong Kong stocks closed higher for two straight sessions, led by blue-chip stocks. The Hang Seng Index ended 1.2% higher at 26675.98, in line with the mainland indexes which clawed back some of the heavy losses Monday. Tech companies were big gainers amid the
current coronavirus outbreak, which has restricted movements.

Singapore shares rose, boosted by overnight advances on Wall Street. The FTSE Straits Times Index closed 1.3% higher at 3156.57 on broad-based gains. And Malaysia’s benchmark Kuala Lumpur Composite Index advanced by 0.9% to 1535.80 as blue chips rebounded on bargain-hunting activity.

  • Australian market expected to open lower 05/02/20, FP Markets
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