Global Fundamental Analysis 13/03/2020

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract expected to open 382 points down.


President Trump announced a 30-day ban on most travel from Europe to the U.S., as well as other measures to fight the coronavirus, that only exacerbated worries about the pandemic.


The coronavirus continued to send shock waves through debt markets, prompting sharp swings in Treasury yields and more selling in corporate bonds. In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 0.725%, according to Tradeweb, compared with 0.817% Wednesday.  


Overnight Summary




Australian Market

Australian shares have closed at their lowest in nearly three and a half years after losing another 7.4% despite the federal government’s announcement of a A$17.6 billion stimulus package. The benchmark S&P/ASX 200 index descended deeper into bear-market territory, shedding 421.3 points to close at 5306.2, its lowest since Nov. 9, 2016.  

All but three of the 12 sectors lost more than 7%, with financials and energy tumbling more than 8%. Travel-related stocks were badly hit, with Qantas dropping 9.9% to a three-year low A$3.64, Flight Centre falling 18% and Webjet shedding 20%.  Cimic and Pro Medicus were the only ASX 200 stocks to gain.  


US Market

The U.S. stocks sell-off that pushed the Dow Jones Industrial Average into a bear market continued at a furious pace intraday as the coronavirus pandemic threatened to deeply harm global growth.  

The S&P 500 shed more than 7% shortly after the opening bell, sending that index into bear market territory and triggering a 15-minute halt in trading. The drop marked the second time this week that a rarely-used circuit breaker was triggered.  Yet there was little that could calm jittery investors throughout the day, even after central banks and governments attempted to assuage the markets. After markets resumed trading around 9:50 a.m., U.S. stocks plummeted. An early afternoon announcement by the

Federal Reserve that it would pump more than $1.5 trillion into short-term funding markets initially pared some of those losses before stocks tumbled once again.  The Dow industrials traded down nearly 2,000 points at mid-afternoon Thursday, declining 8.6%. The Nasdaq Composite fell 8.2%, putting the tech-heavy index on track to finish the day in a bear market. The S&P continued its losses, dropping 8.2% in the afternoon.



Gold futures fell sharply, settling at a nearly two-week low under $1,600 an ounce, as a selloff in the stock market sent traders scrambling to sell positions in the precious metal in a bid for cash.  


Oil Futures

U.S. benchmark oil prices ended the session 4.5% lower at $31.50/bbl as concerns over the spreading coronavirus force shutdowns in the U.S., including a suspension of professional basketball and hockey seasons.  



The euro fell 1.3% to a one-week low of $1.1108 against a broadly firmer dollar, according to FactSet, with investors seemingly judging that the European Central Bank’s stimulus measures announced Thursday are unlikely to prevent a severe economic fallout from the coronavirus.  


European Markets

European stocks tumbled as fears surrounding the potential global economic impact of the coronavirus pandemic continue to rise. The Stoxx Europe 600 and FTSE 100 dropped around 11% and the CAC-40 and DAX were both down more than 12%.  U.S. President Donald Trump’s ban on travel from 26 EU nations, plus continued uncertainty about potential moves to help U.S. people and businesses most affected by the virus, failed to impress investors.  


Asian Markets

Hong Kong stocks tumbled, ending 3.7% lower at 24309.07, its lowest closing level since late April 2017. All HSI constituents ended in negative territory with tech suppliers and oil companies leading the losses.  

Japan’s Nikkei Stock Average fell 4.4% to 18559.63, the lowest close since April 2017, and entered a bear market.  

Indian shares ended the session sharply lower, tracking steep declines across Asian markets. The benchmark Sensex plunged 8.2% to close at a two-year low of 32778.14. All index constituents suffered losses, with banks and oil companies leading declines.  

South Korean stocks fell to a near five-year closing low. The benchmark Kospi finished 3.9% lower at 1834.33–the lowest since Aug. 24, 2015. Construction, shipbuilding, airline and tech shares led the decline.  

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