Global Fundamental Analysis 03/03/2020

Australian Market

Australian shares pared heavy early losses to finish 0.8% lower at a near nine-month low of 6391.5. The benchmark S&P/ASX 200 index gave up 196 points in the first 90 minutes before clawing back most of the losses and closing at its lowest since June 6.  

A seventh straight losing session amid coronavirus fears leaves the index down 10.8% from its Feb. 20 record close of 7162.5. The big four banks of CBA, NAB, ANZ and Westpac fell by between 1.6% and 2.5%, pulling the heavyweight financial sector down 1.5%. Beaten-down WiseTech jumped 13% after a recommendation upgrade, helping tech stocks gain 0.9%. 

US Market

The Dow Jones Industrial Average rose 561 points, or 2.3%, to 25984, after briefly trading in the red. The S&P 500 gained 1.7% and the Nasdaq Composite added 1.6%.  

Investors piled into wagers that the Federal Reserve and other major central banks may lower interest rates, possibly in tandem to boost the firepower of stimulus efforts. The yield on the benchmark 10-year U.S. Treasury note plumbed new lows, falling as low as 1.031%, according to Tradeweb, from 1.127% Friday. Most recently it was at 1.083%.  

Commodities

Gold futures rebounded on Monday, tacking on nearly 2% after suffering the sharpest drop since 2013 in the previous session, finding support as central banks promise to act appropriately to mitigate the effect of a viral outbreak that is expected to hurt global economies and supply chains.  

Oil Futures

U.S. oil prices ended 4.4% higher at $46.75 a barrel, recouping most of Friday’s 4.9% price decline as rising share prices in U.S. equity markets helped fuel a relief rally for crude and other commodities.  

Forex

The euro pared gains slightly after reaching its highest level against the dollar since mid-January as the European Central Bank signaled it was willing to use measures to combat the economic impact of coronavirus.  

European Markets

European shares were mostly higher after sliding in and out of the red during the day amid uncertainty about the coronavirus epidemic. The Stoxx Europe 600 settled 0.09% higher, the FTSE 100 rose 1.1% and the CAC-40 gained 0.4%, though the DAX and Milan’s FTSE MIB dropped 0.3% and 1.5% respectively.  

Asian Markets

The benchmark Shanghai Composite Index rose 3.2% to 2970.93, the smaller Shenzhen Composite Index climbed 3.8% to 1869.65 and the startup-heavy ChiNext added 3.1% to 2135.42. Construction-material makers and 5G vendors led the gains in both Shanghai and Shenzhen as the two sectors stand to benefit more from stronger stimulus.   Hong Kong stocks reversed opening losses to close higher, tracking strong gains in A-share markets on expectations of further stimulus from Beijing to cushion against the coronavirus epidemic following historically low February PMI readings. The Hang Seng Index closed 0.6% higher at 26291.68 

Japanese stocks end higher, reversing earlier declines after the Bank of Japan promised to supply ample liquidity in response to the coronavirus’s impact. The Nikkei Stock Average closed up 1.0% at 21344.08, with consumer-related stocks among the best performers.  

South Korean stocks finished higher, driven by gains in tech companies. The benchmark Kospi advanced 0.8% to 2002.51, snapping a three-session losing streak. Sentiment was also buoyed by the won’s gain against the dollar on expectations of a Fed rate cut.  

India’s Sensex fell, reversing earlier gains, after the nation’s health ministry reported a coronavirus case in the capital of New Delhi and another case in Telangana. The benchmark index closed 0.4% lower at 38144.02, led by a mixed bag of stocks.