Global Fundamental Analysis 27/02/2020

Australian Market

The Australian share market closed 2.3% lower at 6708.1 as coronavirus fears continue to infect global equity markets.  

It’s the first time since August that the benchmark S&P/ASX 200 has gone backwards for four straight sessions, retreating a total of 6.3% from its record close of 7162.5 on Feb. 20.  

Every sector lost ground for a second straight session, with health and tech leading falls as both declined 3.6%. The heavyweight materials sector gave up 2.4% and the financials 2.0% as investors continued to cut market exposure. Rare exceptions included Nine Entertainment, Invocare and Healius, which jumped between 6.5% and 15.2% on positive earnings.  

US Market

The Dow Jones Industrial Average turned lower, giving up a strong early advance, as investors continued to assess the economic impact of the coronavirus epidemic.  

The blue-chip index opened sharply higher and climbed as much as 461 points before turning negative in afternoon trading. It was down 86 points, or 0.3%, in recent trading. The S&P 500 fell 0.1%, while the Nasdaq Composite added 0.3%.  

Investors were hoping for markets to stabilize after the Dow fell more than 1,900 points Monday and Tuesday in its largest two-day point decline on record. Markets were spooked this week by a growing number of coronavirus cases outside China and fears that the epidemic would dent corporate earnings and global growth.  

Volatility in U.S. equity markets remained high. The Cboe Volatility Index, a closely watched measure of market turbulence known as VIX, gained 1.5%, a day after hitting its highest levels in more than a year.  

Commodities

The gold futures price fell by US$6.60 an ounce or 0.4% to US$1,640.40 an ounce. Spot gold was trading near US$1,638 an ounce in late US trade. Iron ore fell by US$2.75 or 3.1% to US$87.35 a tonne

Oil Futures

U.S. oil prices settled 2.3% lower at $48.73 a barrel, the lowest closing price since Jan. 8, 2019, amid rising fears over the spread of the deadly coronavirus. 

Forex

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, rebounded to 92.16 from 91.97 on Tuesday. The British pound fell 0.7% against the dollar amid concerns about the government’s mandate for trade talks with the European Union, which is due to be made public Thursday.

European Markets

European stocks were mixed as traders weigh corporate earnings and reports of increased coronavirus cases outside of China. The pan-European Stoxx 600 and CAC-40 were flat, the DAX fell 0.1% and the FTSE 100 rose 0.4%.  

ISS A/S shares fell 14.7% after it said the coronavirus and a recent malware attack create uncertainty for the Danish facility-management firm’s outlook. French biotech company bioMerieux declined 5.8% after poorly-received 2019 results.  Alcon gained 7.6% after the Swiss medical group issued positive 2020 guidance and reported fourth-quarter sales growth. Peugeot maker Groupe PSA rose 5.5%, leading auto stocks higher, after raising its dividend and posting record annual profit for 2019.  

Asian Markets

Hong Kong stocks pared some of the morning’s losses after the government presented a HK$120 billion package to help cushion the coronavirus’s economic impact. However, the benchmark Hang Seng Index still ended lower, falling 0.7% to close at 26696.49 after a 1.5% decline at market open.  

Japan’s Nikkei Stock Average hit its lowest level in more than four months, weighed by concerns about broader economic disruptions as a result of the coronavirus epidemic. The Nikkei settled 0.8% lower at 22426.19, the lowest closing since Oct. 15.  

South Korea’s benchmark Kospi declined 1.3% to close at 2076.77, dragged by tech stocks. Worries that the spreading coronavirus could continue to disrupt supply chains and slow economic growth weighed on sentiment, Kiwoom Securities says. Confirmed coronavirus cases totaled 1,146 as of early Wednesday in Korea–making it the biggest outbreak outside of China.  

Indian shares ended lower for the fourth straight session, as investor concerns continued to mount amid the growing scale of the coronavirus epidemic. The benchmark Sensex fell 1.0% to close at 39888.96. Drug maker Sun Pharmaceutical Industries was the biggest loser, slumping 3.6%.