Global Fundamental Analysis 26/02/2020

Australian Market

The Australian share market pared early losses but still closed 1.6% lower on persisting coronavirus fears.

The benchmark S&P/ASX 200 initially fell 178 points following hefty drops in the U.S. and Europe, but clawed back more than a third of those losses to close at 6866.6.
The muted fightback came after U.S. drugmaker Moderna said it had shipped the first batch of its rapidly developed coronavirus vaccine for human testing.

Every sector still finished lower, with telecommunications, consumer discretionary, energy and materials each falling more than 2%. Appen’s 6.5% rise on strong fiscal 2020 earnings guidance helped the tech sector keep losses to 0.3%.

US Market

A rout in global financial markets deepened intraday, sending the Dow Jones Industrial Average down about 900 points and Treasury yields sliding to fresh lows.

The blue-chip index was down 921 points, or 3.3%, near the lows on a volatile trading day. The S&P 500 fell 3.2% and the Nasdaq Composite lost 2.9%, erasing its remaining gains for 2020.

For much of the past several weeks, investors have been fixated on one issue: the potential for a growing coronavirus epidemic to hit economic activity around the world.

Commodities

Gold prices ended lower, giving back a big chunk of the previous session’s haven-inspired gains in a bout of apparent profit-taking.

Gold for April delivery on Comex fell $26.60, or 1.6%, to settle at $1,650 an ounce, while March silver dropped 68.5 cents, or 3.6%, to $18.191 an ounce.  In other commodity markets, March wheat prices rose 2 3/4 cents to $5.39.

Oil Futures

Oil prices fell again, weighed down by investors’ concerns about how the spread of the coronavirus outside China will affect global oil demand.

U.S. crude prices fell 3% to $49.90 a barrel after falling 3.7% on Monday. Brent, the global gauge of prices, declined 2.4% to $54.95 a barrel after dropping 3.8% the day
before.

Forex

The WSJ Dollar Index was recently down 0.23% at 91.97.

European Markets

European stocks ended sharply lower in volatile trading as markets failed to set a floor after the pounding they took over the spread of the coronavirus in Italy and South Korea.

A day after a 5.4% drop that was the worst single-day percentage fall in more than three years, Italy’s FTSE MIB fell 1.3% to 23131.17.  The Stoxx Europe 600, which ended Monday at its third-lowest level of the year, dropped 1.8% to 404.60.

For the Stoxx 600, it’s the largest four-day percentage decline since June 28, 2016.  The FTSE 100, CAC-40 and DAX all dropped 1.9%, while markets in Belgium and Spain were the region’s biggest fallers, down more than 2%.

Asian Markets

South Korea’s Kospi gained 1.2% after falling 3.9% Monday and Japan’s Nikkei 225, which was closed Monday, fell 3.3%.

The Nikkei Stock Average ended at 22605.41, as coronavirus outbreaks outside China, including in South Korea and Italy, heightened concerns about the epidemic. The percentage-point drop was the biggest since December 2018 and the closing level was the lowest since Oct. 21.

South Korean stocks rebounded on bargain-hunting following recent coronavirus-linked falls. The benchmark Kospi ended 1.2% higher at 2103.61, snapping a three-session losing streak. Retail, airline and construction stocks drove the gains, as growth in the number of new infections in the country slowed, helping to calm fears. Sentiment also improve after President Moon called for extra budget spending to help cushion the epidemic’s economic impact.

Hong Kong stocks reversed opening losses to close higher, as Tencent Holdings and smartphone suppliers rose. The Hang Seng Index closed 0.3% higher at 26893.23. Index heavyweight Tencent added 2.9% as its gaming business could benefit from increasing playing time while people are stuck at home due to the coronavirus epidemic.