Global Fundamental Analysis 02/03/2020

Australian Market

The Australian market lost another 3.3% to enter correction territory and completed its biggest weekly drop since the global financial crisis more than a decade earlier.   The S&P/ASX 200 closed at 6441.2 for a 9.8% five-session decline, its largest percentage fall in one week since losing almost 16% in October 2008. The benchmark is 10% down from its Feb. 20 record close of 7162.5.  

Seven of the 12 biggest fallers were gold miners, which gave up some recent gains made as they were perceived as safe havens amid coronavirus uncertainty.  The volatile tech sector fell the most but also featured the best performing ASX 200 stock, as NEXTDC rose 5.3% on first-half results. 

US Market

U.S. stocks extended a punishing selloff, finishing their worst week since the financial crisis with mounting investor unease about the economic fallout from the coronavirus epidemic. 

The Dow Jones Industrial Average shed 357 points after being down more than 1,000 points before paring declines. The blue-chip index avoided falling by more than 1,000 points for the second consecutive day by staging a roughly 640-point rally in the last 15 minutes of trading.  

The S&P 500 fell 0.8% and the tech-heavy Nasdaq Composite recovered after being down more than 3% to close roughly flat in a volatile session. Still, stock losses have been broad, with all 11 of the S&P 500’s sectors falling into negative territory for the year this week. Additionally, more than 95% of S&P 50 stocks are down more than 10% from highs, according to Dow Jones Market Data. For the week, all three indexes fell more than 10%, and from their highs, all three have fallen at least 13%.  

Commodities

Gold futures dropped by nearly 5%, suffering the sharpest daily slide since June 2013. Gold for April delivery on Comex dropped $75.80, or 4.6%, to settle at $1,566.70 an ounce, for the biggest one-day percentage loss since June 20, 2013, according to Dow Jones Market Data. The most-active contract also registered a weekly slide of about 5%, the sharpest decline since the week ending Nov. 11, 2016. The moves erased what had been a gain for the month and it was down 1.3% from the end of January.  

Oil Futures

U.S. oil prices ended the session 4.9% lower at $44.76/bbl for a 16% weekly decline, the biggest one-week fall since the financial crisis, when the week ending Dec. 19, 2008 saw a 26.8% drop.  

Forex

The U.S. dollar weakened sharply against the yen, down 1.6% to 107.88, and depreciated 0.2% against the euro as Treasury yields plumbed fresh lows. The WSJ Dollar Index fell 0.2% as major U.S. stock markets closed their worst week since the financial crisis on worries about how badly the spread the novel coronavirus would hurt the world economy.  

European Markets

European markets were a sea of red as panic-selling gripped markets amid uncertainty about the coronavirus epidemic.  

The Stoxx Europe 600 settled 3.5% lower, the FTSE 100 dropped 3.2%, the CAC-40 fell 3.4% and the DAX was off 3.9%, with mining, oil and travel stocks among the biggest fallers.

Asian Markets

China’s major stock indexes ended sharply down, following the global equities rout as the spreading coronavirus triggers selloffs worldwide. The benchmark Shanghai Composite Index, where many of China’s large state-owned companies are listed, declined 3.7% to 2880.30. The smaller Shenzhen Composite Index and startup-heavy ChiNext Price Index were off 4.9% and 5.7%, respectively.  

The Nikkei Stock Average posted the biggest daily percentage loss since December 2018, reaching correction territory, defined as a drop of 10% or more from a recent peak, as the coronavirus epidemic causes greater economic disruption. The Japanese government asked all schools nationwide to be closed starting Monday through early April. Nikkei Stock Average settled down 3.7% at 21142.96, the lowest level since Sept. 5.  

South Korean stocks slumped to a nearly six-month low as fears over the spreading coronavirus prompted a panicked selloff. The benchmark Kospi fell 3.3% to 1987.01–the lowest since Sept. 3. With the epidemic expected to dent economic growth and corporate earnings, stocks were broadly lower.