Australian market expected to open lower 23/01/20

Australian market expected to open lower 23/01/20

 

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open down 15 points.

 

A fresh trade deal between the U.S. and China that could see tariffs rolled back might be possible before November, although there is no deadline, U.S. Treasury Secretary Steven Mnuchin said.  

 

A newly identified virus originating in Wuhan, in central China, is spreading among people primarily through the respiratory tract, raising the prospect of transmission by coughing or kissing, as the death toll jumped to 17 and the number of confirmed cases surpassed 500.  

Overnight Summary

 

 

Each Market in Focus

 

 
The Australian share market shrugged off growing worries over the spread of coronavirus to close 0.9% higher at 7132.7.  

Spurning a negative lead from Wall Street, the S&P/ASX 200 posted its second best daily gain of 2020 for a sixth record close in seven sessions.

A2 Milk, upgraded to neutral from sell by Citi, jumped 5.3% to help make consumer staples the best performing sector for a second day in a row. The sector gained 2.9%, while tech rose 1.6% and health lifted 1.4% amid broad-based gains.  
 

U.S. stocks climbed toward records, boosted by a rally in shares of technology companies.  

The Dow Jones Industrial Average advanced 27 points, or 0.1%, to 29220. The S&P 500 added 0.1% and the Nasdaq Composite rose 0.3%, with both indexes on track to close at or near fresh highs.  

Shares of fast-growing technology-driven companies have led the market higher this year, extending a powerful run that lifted many stocks to records in 2019.  The trend showed no sign of abating Wednesday. International Business Machines rose 3.2% after unexpectedly reporting a slight gain in fourth-quarter revenue, ending a streak of declining sales.  

Tesla shares advanced 5.7% after a Wedbush analyst boosted his price target for the stock, citing expectations for strong demand for Tesla products in Europe and China. Shares of the electric-car maker have risen 40% this year, lifting the firm’s market capitalization above $100 billion.  

Apple added 1% following a report that it would take steps to begin assembling a new low-cost iPhone later this year.  

 
 
Gold futures ended with a modest loss, lacking support as some equities markets in Asia and the U.S. climbed and while commodities traders weighed the potential economic impact of an outbreak of a serious virus in China.  
 
Gold for February delivery on Comex lost $1.20, or 0.08%, to settle at $1,556.70 an ounce, while March silver added 2 cents, or 0.1%, to $17.828 an ounce following a 1.5% loss Tuesday.  
 

Oil futures ended lower, pressured by demand concerns linked to the coronavirus outbreak in China, as well as expectations for a weekly rise in U.S. crude inventories.  

Ahead of the supply data, March West Texas Intermediate oil fell $1.64, or 2.8%, to settle at $56.74 barrel on the New York Mercantile Exchange. That was the lowest front-month contract finish since Dec. 3, according to Dow Jones Market Data.  

The dollar is mixed against other major currencies, having climbed against the Canadian dollar after the Bank of Canada hinted at possible future interest rate cuts, but weakened against the British pound following another round of strong U.K. economic data.

The dollar was recently up 0.5% against the Canadian dollar, while the pound was up 0.7% against the U.S. currency. The WSJ Dollar Index was recently down 0.1% at 90.43.  

 
European markets were mostly lower as investors remained cautious about the risks from the viral outbreak in China.  
 
The Stoxx Europe 600 dropped 0.2%, the FTSE 100 fell 0.6%, the CAC-40 was down 0.6%, the DAX retreated 0.4% and all other continental markets decline with the exception of Ireland and Norway.  
 

Hong Kong’s Hang Seng Index and Japan’s Nikkei rose as investors cheered Chinese authorities’ measures to contain the outbreak of a potentially deadly virus. Hospitals are stepping up preventive measures, Chinese officials said at a media briefing in Beijing.  

The Hang Seng Index closed 1.3% higher at 28341.04 after dropping 2.8% Tuesday. The virus outbreak, which is reminiscent of the 2003 SARS epidemic that killed hundreds of people, will weigh on market sentiment, but investors will likely focus on market fundamentals in the longer term.

Tech suppliers led the gains on the index, with Sunny Optical up 5.0% and AAC Technologies 3.6% higher.  Japanese stocks ended higher, led by consumer goods stocks. Japan Airport Terminal rose 3.8%. Cosmetics maker Kose gained 2.3%. The Nikkei Stock Average ended 0.7% higher at 24031.35. Investors are focusing on the upcoming earnings season with electric motor maker Nidec set to report its results.  


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