Global Fundamental Analysis 12/03/2020

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract expected to open 200 points down.


The World Health Organization has declared the new coronavirus a pandemic. China reported a rise in coronavirus infections imported from abroad as the number of cases in the U.S. topped 1,000. German Chancellor Angela Merkel said up to 70% of the population could get infected with the new virus.  


Treasury Secretary Steven Mnuchin urged lawmakers to quickly approve a stimulus measure to ease the economic pain inflicted by the novel coronavirus..  


Overnight Summary




Australian Market

The Australian stock market entered bear market territory after giving up all its gains from the previous day to close down 3.6%. The benchmark S&P/ASX 200 index ticked higher at the open before losing ground through the session to end at 5725.9, 20% down from its Feb. 20 record-high close of 7162.5.  

The financial sector led losses with a 5.3% decline as the major banks–Westpac, ANZ, NAB and Commonwealth–lost between 5.3% and 6.6%; the chief executives of the four lenders met with Australian Treasurer Josh Frydenberg to discuss measures to limit the economic hit of the coronavirus epidemic which could include measures such as waiving or deferring bank fees.  


US Market

U.S. stocks dropped sharply intraday as investors anxious about the economic fallout from the coronavirus pandemic endured another day of tumultuous trading. The Dow Jones Industrial Average tumbled 1,668 points, or 6.7%, to 23340. The S&P 500 fell 6% to 2711.84, and the Nasdaq Composite lost 5.8%.  

The blue-chip index is on the cusp of entering a bear market-a decline of at least 20% from its recent high, set Feb. 12. The index would need to close below 23641.136 to end the current bull market, an extraordinary run of stock gains that began in 2009. The S&P 500 would need to close below 2708.92.  



Gold futures gave up earlier gains to mark their lowest finish in over a week, despite losses in U.S. stocks, as investors await details on a U.S. fiscal stimulus plan from lawmakers to help limit the expected economic pain from the COVID-19 epidemic.

Gold for April delivery on Comex fell by $18, or 1.1%, to settle at $1,642.30 an ounce, after falling 0.9% on Tuesday. The settlement was the lowest for a most-active contract since March 2, according to FactSet data. May silver lost 17.9 cents, or 1.1%, to $16.776 an ounce, following a slid of 0.6% in the previous session.  


Oil Futures

U.S. oil prices fell sharply, ending 4% lower at $32.98/bbl. as world health authorities declared the coronavirus a pandemic while the Russians and Saudis continue to fight over a quickly-shrinking market for crude oil.  



The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, moved slightly higher intraday to 90.76 from 90.74 on Tuesday as U.S. stocks entered bear-market territory. 


European Markets

European stocks dropped as markets followed in the footsteps of the Dow, down nearly 5% as coronavirus jitters persisted. The Stoxx Europe 600 fell 0.7%, the FTSE 100 retreated 1.4%, the CAC-40 was off 0.6% and the DAX backtracked 0.3%.  

The price of a barrel of Brent crude declines 2.2% to $36.40 and sterling is down against the dollar and the euro despite measures announced by the UK government to limit the potential economic effect of the coronavirus.  


Asian Markets

Hong Kong’s Hang Seng Index closed 0.6% lower at 25231.61, weighed by Chinese oil majors that retreated again after it clawed back heavy losses from Monday’s crude-price crash in the previous session. CNOOC fell 5.9%, PetroChina dropped 2.2% and Sinopec shed 0.8%. Mainland telecommunications operators also broadly fell.  

Japan’s Nikkei Stock Average ended at a fresh 14-month low, with electronics stocks falling sharply, weighed by concerns about economic disruptions caused by the coronavirus epidemic. The Nikkei fell 2.3% to 19416.06, its lowest level since Dec. 26, 2018.  

South Korean stocks slumped to a four-year closing low on a selloff driven by persistent fears about the economic impact of the coronavirus. The benchmark Kospi closed 2.8% lower at 1908.27, the lowest since Feb. 17, 2016. Tech, tourism and airline stocks lead the declines.  

Indian shares ended higher as the market recouped some of Monday’s losses that came as global crude-oil prices collapsed. The benchmark Sensex rose 0.2% to close at 35697.40. Auto makers and banks, among the hardest hit in the previous session, led gains.  

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