Global Fundamental Analysis 28/02/2020

OPENING CALL: The Australian share market is expected to open lower. 


Boeing has agreed to cover payments for jet engines made for its grounded 737 MAX, easing the burden of the production delay on supplier GE.  

The U.S. central bank is closely monitoring the fallout from coronavirus, Chicago’s Fed president said, but would look for an impact on the economy before thinking of a monetary policy response.  

Overnight Summary




Australian Market

Australia’s benchmark index tumbled 0.8% to 6657.9, erasing its remaining gains for 2020. Tech and energy stocks led declines as all sectors except health and utilities lost ground, pulling the benchmark S&P/ASX 200 to its lowest close since Dec. 4.  

Link Administration was the index’s worst performer, dropping 13% after it said first-half profit plunged 85%. That contributed to the tech sector’s 2.2% decline. The energy sector slumped 2.0% after U.S. crude hit its lowest price since January 2019.  


US Market

U.S. stocks deepened their losses intraday as investors braced for the spreading coronavirus to slow business activity and depress corporate earnings.  

The Dow Jones Industrial Average fell 2.8%, about 774 points, and the Nasdaq Composite slid 3.1%. The S&P 500 was down 2.7%. If the indexes maintain those losses, they will close the session down 10% from their recent highs, a decline known as a correction.  

If the S&P 500 were to close below the correction threshold, it would be the broad U.S. stock index’s fastest decline into correction territory from an all-time high in data going back to 1980, according to Dow Jones Market Data.  



Gold futures gave up earlier gains to finish lower for a third consecutive session, as U.S. bond yields traded above the day’s lows.  The rise in bond yields helped offset support for the metal even as worries about the spread of the COVID-19 epidemic outside of China continued to spark selling in global equity markets.  


Oil Futures

U.S. oil prices fell for a fifth-straight session, ending 3.4% lower at a 13-month low $47.09/barrel as investors watch the fast-spreading coronavirus become a bigger problem in Asia, parts of Europe and potentially the U.S.  

Confusion over next week’s meeting of major oil producers OPEC and Russia is also hurting prices. 



The dollar is weakening as investors flock to safer assets and the U.S. looks like less of a refuge as experts predict a wider spread of the coronavirus in the country.  

The euro was recently up around 1% against the dollar, while the dollar was down 0.4% against the Japanese yen and 0.7% against the Swiss franc.  The WSJ Dollar Index was recently down 0.4% at 91.80.  


European Markets

European stocks fell as U.S. equities retreated on growing concerns about the spread of coronavirus outside of China.  

The pan-European Stoxx 600 fell 3.8%, the DAX dropped 3.2%, the FTSE 100 slid 3.5% and the CAC-40 shed 3.3%. WPP shares tumbled 16% after the U.K. advertising giant said 2020 sales would stagnate after a fourth-quarter decline. G4S slumped 15% after the British security firm agreed to sell a majority of its conventional cash-handling businesses to Brink’s.

Hikma Pharmaceuticals gained 4.6% after the pharmaceutical company said 2019 pretax profit rose and that it doesn’t expect a material hit from coronavirus. Engie rose 3.8% after the


Asian Markets

In Asia, Japan’s Nikkei 225 fell and Korea’s Kospi declined.  The Nikkei Stock Average fell to its lowest level in more than four months, dragged by weakness in travel and brokerage stocks as the coronavirus epidemic causes economic disruptions such as cancellation of major public events. The Nikkei ended 2.1% lower at 21948.23 — the lowest close since Oct. 11.  

South Korea’s benchmark Kospi closed 1.1% lower at 2054.89 as a surge in new coronavirus cases in the country weighed on investor sentiment. Oil refiners and tech stocks led the declines, as the global spread of the epidemic causes worries in trade-reliant Korea. Hong Kong shares ended the session higher after three straight sessions of declines. The benchmark Hang Seng Index rose 0.3% to close at 26778.62, following the city-government’s vow to spend billions of dollars to cushion the economic impact of the coronavirus epidemic.  

Singapore stocks ended lower as the number of coronavirus cases outside China rose, prompting sell-offs in global financial markets. The benchmark Straits Times Index fell 0.2% to 3111.70. Indonesia’s main index closed at its lowest level since March 2017 due to global risk-off sentiment, said an Indonesia-based equities analyst. The Jakarta

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