Global Fundamental Analysis 10/03/2020

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract expected to open 284 points down.


U.S. government bonds, which have already rallied to unprecedented highs, extended gains intraday. The yield on the 10-year Treasury, which moves inversely to bond prices, dropped to 0.577%. The 30-year yield fell below 1%, and more recently was at 1.003%.  


Short-form streaming-video service Quibi, which is preparing to launch next month, faces claims that one of its core tech features infringes on another company’s intellectual property, according to documents describing the dispute.  


Overnight Summary




Australian Market

Australia’s S&P/ASX 200 index neared bear market territory — typically defined as a peak-to-trough decline of more than 20% — after slumping on fears of a global energy glut. The ASX 200 ended 7.3% lower at 5760.6, taking the decline since its Feb. 20 closing high to 19.6%.  

Oil futures dropped more than 25% on Saudi Arabia’s decision to cut most of its oil prices and boost output. That sent Woodside spinning 18% lower, while Santos declined 27% and Oil Search dropped 35%. Oil’s fall rattled investors already skittish due to the coronavirus.  

Rio Tinto fell 6.4% and Fortescue dropped 11%, while National Australia Bank and ANZ both lost 8.5%. Gold miners bucked the trend, with Newcrest up 2.5% as the metal’s safe-haven qualities shine.  


US Market

U.S. stocks careened lower intraday, pushing major indexes closer to bear-market territory as a price war for oil and coronavirus fallout frightened investors.  The selling was heavy across markets and geographies, with investors seeking shelter in government bonds and sending Treasury yields to new lows. U.S. stocks fell hard enough after the open to trigger a 15-minute trading halt.  

Recently, the Dow sank 2,030 points, or 7.9%, to 23837. The S&P 500 fell 7.5% to 2750. And the Nasdaq Composite slid 6.7% to 7998. All 11 sectors in the S&P 500 were down, led by energy, which slid 19%. Financials were down 11%, and materials were down 9.2%.  

When the circuit breaker hit, the Dow and Nasdaq were down 19% from record highs set earlier this year and the S&P had fallen 18% from its high, leaving them on the brink of bear-market territory. A drop of 20% from the highs would halt a bull-market run that began after the financial crisis-stocks bottomed out 11 years ago to the day, on March 9, 



Gold for April delivery on Comex picked up $3.30, or 0.2%, at $1,675.70 an ounce, after bullion put in a 6.79% gain last week, representing its largest weekly rise for a most-active contract since 2011, according to FactSet data.  


Oil Futures

Oil futures suffered their biggest one-day percentage plunge since the Gulf War in January 1991, slumping to a four-year low as Russia and Saudi Arabia geared up for a global price war that threatens to flood the world with crude at the same time demand is under pressure due to the global spread of COVID-19.  

West Texas Intermediate crude for April delivery CL.1, -23.40% on the New York Mercantile Exchange fell $10.15, or 24.6%, to end at $31.13 a barrel.  



Foreign-exchange markets also faced renewed volatility intraday, as steep drops in oil sparked a flight from commodity-linked currencies. The Russian ruble lost 8.3%, while the Norwegian Krone dropped 2.8%. 

The Japanese yen, which often rallies in times of market stress, surged 2.9% to trade below 103 to the dollar, at its strongest levels since 2016.  


European Markets

European stocks tumbled as investors headed for the hills amid coronavirus fears and the prospect of an oil-price war. The Stoxx Europe 600 dropped 7.4%, the FTSE 100 fell 7.7%, the CAC-40 was down 8.4% and the DAX retreated 7.9%.  


Asian Markets

Japanese stocks closed at a 14-month low, weighed by an oil-price slump and weak economic data. Data showed gross domestic product for the October-December period contracted at a faster pace than initially estimated, shrinking an annualized 7.1% in the quarter. The Nikkei Stock Average closed 5.1% lower at 19698.76.  

Hong Kong stocks fell sharply alongside global equities on selloffs spurred by a plunge in oil prices and anxiety over the coronavirus. The Hang Seng Index closed 4.2% lower at 25040.46, the lowest finish since October 2018.  

South Korean stocks dived to a six-month closing low as crashing oil prices and persistent fears about the coronavirus’s spread sparked volatility across markets. The benchmark Kospi closed 4.2% lower at 1954.77 — the lowest since Aug. 29 last year

And Indian shares followed Asian counterparts to end the session sharply lower, as crude oil prices collapsed and triggered a round of panic selling. The benchmark Sensex shed 5.2%, the largest one-day decline in more than three years, to settle at 35634.95, the lowest closing since 2018.

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