Global Fundamental Analysis 25/02/2020

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open down 28 points.


Italy reported a sixth death from the coronavirus as authorities imposed quarantines and other restrictions in the country’s economic heartland to fight what is now the world’s third-biggest national outbreak.  


Boeing is planning more financial and other support to its 737 MAX suppliers to prepare them to resume production of the jetliner-and dissuade some from seeking more business from Airbus.  


Overnight Summary




Australian Market

Australian stocks recorded their biggest fall so far this year, closing 2.3% lower at 6978.3 as investors cut risk profiles amid the worsening coronavirus epidemic.  

Every sector lost ground as the benchmark S&P/ASX 200 index gave up almost three weeks of gains in a single session, closing below 7000 points for the first time since Feb. 5. The energy, tech and consumer discretionary sectors led declines with falls of 4.0%, 3.9% and 3.6%, respectively.  

Plumbing parts supplier Reliance Worldwide tanked 26% after it acknowledged shortages of Chinese manufactured parts. Eight of the day’s top 10 largest gainers were gold miners, as investors flocked to perceived safe havens.  


US Market

Investors around the world stepped up their retreat from stocks and piled into haven assets like government bonds and gold, reflecting escalating worries that the coronavirus will crimp global growth.  

The Dow Jones Industrial Average dropped more than 1,000 points; the yield on the benchmark 10-year Treasury note approached its record low; and gold prices climbed for the eighth straight session to a fresh seven-year high.  

The blue-chip index fell 801 points, or 2.8%, erasing it gain for the year. The index earlier dropped as many as 1,080 points. The S&P 500 declined 2.6%, with all 11 sectors posting declines.  

The Nasdaq Composite suffered the steepest losses, dropping 2.8%. Tech stocks have continued to lead the market this year, and the Nasdaq is hanging on to a 3.7% gain for 2020.



 Gold futures surged to their highest finish since February 2013, as the spread of COVID-19 to Italy and other parts of the globe injected a fresh bout of nervousness into the markets, lifting demand for assets perceived as havens like gold.  

 Gold futures advanced $27.80, or 1.7%, to settle at $1,676.60 an ounce, lifting the precious metal nearer to a psychologically significant level at $1,700 that it hasn’t breached since 2012. The metal marked its highest most-active contract settlement since February of 2013, according to FactSet data.  


Oil Futures

 Oil futures settled lower, with U.S. prices losing almost 4% as the market continued to fret over the impact of coronavirus on energy demand.  

April West Texas Intermediate oil fell $1.95, or nearly 3.7%, to settle at $51.43 barrel on the New York Mercantile Exchange.  



The Federal Reserve would likely need to cut rates aggressively toward zero to trigger a sustained weakening of the dollar as the safe haven currency benefits from worries about the coronavirus epidemic, MUFG Bank said.  


European Markets

European stocks plunged as the continued spread of the coronavirus epidemic spooks global markets. The Stoxx Europe 600 dropped 3.8%, the FTSE 100 retreated 3.3%, the CAC-40 backtracked 3.9%, the DAX was down 4% and Milan’s FTSE MIB was off 5.4%.  

Airlines and mining stocks were among the biggest decliners as investors fretted about the potential effect of the virus on global travel and trade.  


Asian Markets

Hong Kong stocks ended the session lower as the scale of the coronavirus epidemic grows. The benchmark Hang Seng Index fell 1.8% to at 26820.88, with Chinese oil majors leading the declines as crude prices were dragged down by dampened global demand and reports of new tensions between major oil exporters Saudi Arabia and Russia. PetroChina slumped 4.7%, CNOOC lost 3.6% and Sinopec fell 2.1%.  

Markets in Japan were closed Monday.  South Korea stocks finished lower for a third straight session as a spike in new coronavirus cases weighed on sentiment. The benchmark Kospi slumped 3.9% to 2079.04 as investors shunned risky assets. The number of coronavirus cases in South Korea totaled 763 as of Monday, the biggest for a country outside of China.  

Indian shares ended lower as the scale of the coronavirus epidemic grew. The benchmark Sensex lost 2.0% to close at 40363.23, with all its constituents declining. Oil companies led losses, as crude prices fell due to weaker demand and fresh tensions between oil exporters Saudi Arabia and Russia.  

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