Global Fundamental Analysis 23/03/2020

Australian Market

Australian shares rose following a raft of central bank and government actions aimed at stabilizing financial markets amid the coronavirus pandemic, with the benchmark S&P/ASX 200 index closing 0.7% higher to 4816.6.

Property shares surged 9% and energy shares rose nearly 5%, though the health-care sector dipped 5%.  Sonic Healthcare led the losers, falling 12% after it withdrew its guidance due to the pandemic.

US Market

U.S. stocks fell as fresh measures to contain the coronavirus pandemic spooked investors, capping off the worst week for the Dow Jones Industrial Average and S&P 500
since October 2008.

Major indexes opened higher but pulled back after New York Gov. Andrew Cuomo ordered the state’s workforce to stay home. California and Illinois have issued similar edicts. Stocks sank further after the Trump administration said U.S. borders with Mexico and Canada would be closed to nonessential travel.

The Dow industrials and S&P 500 lost more than 4%, closing near session lows andextending their declines for the week to at least 14%. The whipsaw moves in markets over The past month have rattled investors who even fled traditionally safe assets like U.S. government bonds and gold in recent days.

Commodities

Gold futures rose, finding support after indiscriminate selling across financial markets weighed even on some traditional havens, sending prices for the precious metal
lower for the week.

Gold for April delivery on Comex rose $5.30, or 0.4%, to settle at $1,484.60 an ounce. For this week, prices for the most-active contract lost 2.1%, according to FactSet data. The previous week’s loss of more than 9% was the largest since September 2011.  May silver rose 25.1 cents, or 2.1%, to $12.385 an ounce, for a weekly decline of
14.6%. Prices on Wednesday settled at the lowest since January 2009.

Oil Futures

U.S. benchmark oil prices posted another huge daily decline, sliding 11% as demand shrunk further amid stay-at-home orders in California and New York to prevent the spread of coronavirus.

Friday’s drop results in a 29% weekly decline, just shy of a 29.4% rout in January 1991 that was the largest on record.

Forex

The U.S. dollar strengthened 0.2% against the euro and 0.6% against the yen as the  major U.S. stock indexes fell around 4% and 10-year Treasury yields dipped below 1%.

European Markets

European stocks rose, as investors appeared willing, for now, to put their faith in vast stimulus moves from central banks and governments to shore up economies against the fast-spreading coronavirus pandemic.

Up for a second straight session, the Stoxx Europe 600 index rose 2% to 293.33. The German DAX and French CAC 40 indexes gained 3.7% and 5.2% respectively, and the FTSE 100 index rose 1%.

Central banks and governments have sped up efforts to cushion the economic blow already being delivered by the coronavirus pandemic, which has ground many industries to a halt.

The Bank of England suspended 2020 stress tests for the eight major U.K. banks and building societies, a day after cutting interest rates for the second time in a week. The BoE and European Central Bank have announced expanded asset-buying programs this week as well.

Asian Markets

Hong Kong stocks staged a comeback, alongside most other Asian equities, after steep falls most of this week. The Hang Seng Index rose 5.1% to close at 22805.07. The gains came after the U.S. Fed said on Thursday that it would lend billions of dollars to central banks in Australia, South Korea and seven other countries.

South Korean stocks rebounded strongly after the previous day’s plunge to a near 11-year closing low, snapping a seven-session losing streak. The benchmark Kospi closed 7.4% higher at 1566.15. A $60 billion currency swap facility between the Bank of Korea and the U.S. Federal Reserve calmed market jitters over a possible dollar crunch driven by the coronavirus pandemic and a rush for the greenback.

Indian shares extended early gains, in line with regional peers, due to improved investor sentiment from news of emergency stimulus measures by global central banks. The Sensex ended up 5.8% at 29915.96.

Singapore shares extended gains from early morning trade, following news that Singapore’s central bank has set up a US$60 billion swap facility with the Fed as part of coordinated central bank action. The FTSE Straits Times Index closed 4.3% higher at 2410.74, helped by bank and property stocks. Genting Singapore was among the best performers, rising 13.7%.