Global Fundamental Analysis 30/03/2020

Global Fundamental Analysis 30/03/2020

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract expected to open 6 points up.

U.S. regulators gave banks a reprieve from new accounting standards that require lenders to book losses on soured loans more quickly, the latest step designed to encourage banks to keep lending during the spread of the new coronavirus.

The China Securities Regulatory Commission will allow Goldman Sachs and Morgan Stanley to move to 51% ownership of their local joint ventures, taking a key step in opening up the country’s financial markets to Wall Street.

Overnight Summary

EACH MARKET IN FOCUS

Australian Market

Australian shares slumped 5.3% after giving up early gains to resume their downward trajectory. The benchmark S&P/ASX 200 index was 2.4% ahead in early trade after three straight days of gains and with the Dow Jones Industrial Index surging out of bear market territory.   However, the index steadily lost ground and closed at 4842.4, up just 0.5% for the week. Every sector finished lower, with property trusts and financials the worst performers.

The big banks – NAB, CBA, Westpac and ANZ – lost between 6.3% and 7.4%, with losses accelerating after Australia’s Prime Minister said lenders and landlords would have to bear some of the cost of failed and struggling businesses.

US Market

U.S. stocks fell, but hung on to strong weekly gains as lawmakers sent President Trump the largest economic-relief package in U.S. history in response to the coronavirus
pandemic.   Investors have been on a roller-coaster ride as attempts to curb the coronavirus pandemic constrain economic activity.

Despite a daily decline Friday, the Dow Jones Industrial Average for the week gained 13%-its best week since 1938. On Thursday the Dow capped a furious three-day rally that pushed the blue-chip index into a new bull market. That follows two weeks of double-digit declines, one of which was the worst since October 2008.

The S&P 500 and the Nasdaq Composite were both headed toward weekly gains of at least 10%. On the day, the Dow fell 4.1%, while the S&P lost 3.4% and Nasdaq declined 3.8%.

Commodities

Gold futures settled with a loss but still scored the biggest weekly rise in more than 11 years in a rebound fueled in part by a weaker U.S. dollar and concerns about disruptions in the physical market for the precious metal.

Gold for April delivery on Comex fell $26.20, or 1.6%, to settle at $1,625 an ounce. For the week, prices for the most-active contract rose 9.5%, which marked the biggest
weekly rise since September 2008, according to FactSet.

Oil Futures

Oil futures fell, with the slowdown in energy demand sending prices down for a fifth straight week. U.S. benchmark prices, however, found modest support after Baker Hughes reported that the number of active U.S. oil rigs fell by 40 to 624 this week, indicating a likely decline in production.

May West Texas Intermediate oil fell $1.09, or 4.8%, to settle $21.51 a barrel on the New York Mercantile Exchange after trading as low as $20.88. For the week, prices fell
nearly 5%.

Forex

The U.S. dollar weakened broadly again as the House passed the $2 trillion coronavirus stimulus bill, which President Trump signed. USD weakened 0.9% against the euro and 1.6% against the yen.

European Markets

European stocks dropped as investors fretted over rising coronavirus cases and the EU’s failure to agree an economic rescue package to tackle the pandemic.  The Stoxx Europe 600 fell 3.3%, the FTSE dropped 5.3%, the DAX declined 3.7% and the CAC-40 shed 4.2%.
Royal Mail shares fell 17.6% after the postal operator said its U.K. business would be loss-making this year and that it may have to cut back on postal services due to the
coronavirus.  Retail stocks are weaker on coronavirus shutdown concerns.

Asian Markets

Hong Kong stocks pared back some early gains to close a tad higher, in line with broadly higher Asian equities. The benchmark Hang Seng Index rose 0.6% to 23484.28, its third consecutive session to end in positive territory. Companies controlled by Hong Kong billionaire Li Ka-shing were among the biggest winners today as a stronger British pound bodes well for their sizable operations in the U.K.

Japanese stocks ended higher, led by gains in pharmaceutical and electronics stocks, as hopes for policy stimulus ease concerns about the coronavirus pandemic following recent routs in global markets. Tokyo Electron rose 5.1% and Ono Pharmaceutical gained 9.0%. The Nikkei Stock Average rose 3.9% at 19389.43.

Indian stocks fell, snapping a three-day winning streak supported by the INR1.7 trillion aid package unveiled by the government Thursday to help those most affected by
the coronavirus pandemic. The benchmark Sensex slipped 0.4% to 29815.59. Stocks that jumped in the previous session broadly retreated, pulling the index lower.

South Korea’s benchmark Kospi finished 1.9% higher at 1717.73, led by airline, financials and tech stocks. The index gained 9.7% over the week after two straight weekly
losses. Investor sentiment was buoyed by rising hopes for stimulus to stem the economic fallout from the coronavirus pandemic and increasing demand for memory chips used in data servers.

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