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Global Market Report - 10 February

Lex Hall  |  10 Feb 2020Text size  Decrease  Increase  |  
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Australia

Australian shares look set to open flat amid renewed global concerns about the coronavirus outbreak.

The SPI200 futures contract was up 7.0 points, or 0.1 per cent, at 6962 at 8am Sydney time on Monday.

The Australian benchmark S&P/ASX200 index finished Friday down 26.6 points, or 0.38 per cent, at 7022.6, while the broader All Ordinaries index fell 27.3 points, or 0.38 per cent, to 7121.4.

The US and European markets also fell slightly before they closed for the week on the back of renewed concerns about the deadly and fast-spreading virus.

St George Economics says a strong US payrolls report offered only a brief break from virus concerns.

"The death toll from the coronavirus has now exceeded that of SARS," it said in a research note.

On Wall St, the Dow Jones Industrial Average fell 277.26 points, or 0.94 per cent, to 29,102.51, the S&P 500 lost 0.54 per cent, and the Nasdaq Composite dropped 0.54 per cent.

The Australian dollar was buying 66.64 US cents at 8am on Monday from 67.17 US cents on Friday.

Asia

Chinese stocks eked out gains on Friday, although they suffered their worst weekly loss in nine months on concerns about an economic impact due to the rapidly spreading coronavirus in China.

The Shanghai Composite index closed up 0.3 per cent at 2875.96. For the week, it shed 3.4 per cent after markets witnessed heavy selling on Monday when they reopened after the Lunar New Year break.

China had extended the holiday period to contain the spread of the virus.

The blue-chip CSI300 index ended flat and closed the week with losses of 2.6 per cent. The CSI300, Shanghai and Shenzhen benchmarks have all recovered over half of their losses made on Monday.

Hong Kong’s stocks fell on Friday as local residents hoarded goods and an airline cut jobs, but the market nevertheless recorded its best week since December amid hopes that Beijing will do more to support growth.

At the close of trade, the Hang Seng index was down 0.3 per cent at 27,404.27. But the index rose 4.1 per cent week-on-week, its largest weekly jump since mid-December of last year.

Japanese shares ended lower on Friday as investors booked profit after the major indexes posted their biggest one-day gain in more than a year in the previous session following China’s decision to halve tariffs on some US imports.

The benchmark Nikkei average ended down 0.2 per cent at 23,827.98.

Europe

European shares retreated from record highs on Friday, as underwhelming earnings reports and concerns about the economic damage from the coronavirus outbreak halted a stellar run in stocks this week.

The pan-European STOXX 600 index fell 0.26 per cent, snapping a four-day winning streak, as the number of deaths from the flu-like virus climbed to 636 and several more companies suspended operations in the country.

Burberry Group said the outbreak was hitting luxury demand in China and Hong Kong, a key market for the British fashion brand. Its shares fell marginally.

China-exposed sectors such as basic materials, luxury and auto stocks, which have seesawed over the past two weeks on virus fears, were the biggest decliners on the day.

However, Friday’s losses did little to deter the STOXX 600 from recording its best weekly gain since November 2018 as China’s attempts earlier this week to limit the fallout of the outbreak reassured investors.

After spending much of the session in the red, Swiss lender Credit Suisse Group ended 0.2 per cent higher after chief executive Tidjane Thiam quit following a spying scandal that has hit the reputation of the Swiss bank.

Miner Norsk Hydro tumbled 12 per cent after missing quarterly profit estimates, while Belgian materials and recycling group Umicore fell about 10 per cent after an earnings miss at one of its key divisions.

Economic data from the bloc this week had raised hopes that a slowdown may be bottoming out, but latest numbers showed German industrial output registered its biggest drop in more than a decade in December.

Among the bright spots, cosmetics maker L’Oreal hit a record high and fertilizer maker Yara International ASA rose 5.3 per cent after posting better-than-expected quarterly profit.

Shares in Finland’s Nokia and Sweden’s Ericsson rose about 6 per cent each after US Attorney General William Barr said the US and its allies should consider taking a “controlling stake” in the European companies to counter China-based Huawei’s dominance in 5G wireless technology.

North America

Wall Street fell from record levels on Friday after a four-day rally as investors digested the monthly US jobs report and braced for the next coronavirus developments, but stocks still posted solid gains for the week.

The S&P 500 recorded its biggest weekly percentage increase in eight months and the Nasdaq tallied its biggest weekly rise in more than a year.

The Labor Department’s closely watched employment report showed non-farm payrolls increased by 225,000 jobs last month, while economists polled by Reuters had forecast payrolls would rise by 160,000 jobs.

The report followed other encouraging US economic data earlier in the week. Indeed, key risks to the US economy have receded, the Federal Reserve said in its latest monetary policy report to congress, but the Fed did note risk from the fallout from the coronavirus outbreak.

The death toll in mainland China topped 630 as the coronavirus epidemic roiled the world’s second-largest economy.

The Dow Jones Industrial Average fell 277.26 points, or 0.94 per cent, to 29,102.51, the S&P 500 lost 18.07 points, or 0.54 per cent, to 3,327.71 and the Nasdaq Composite dropped 51.64 points, or 0.54 per cent, to 9,520.51.

Most S&P 500 sectors fell, with materials and technology the weakest performers.

Fourth-quarter corporate reporting season is more than halfway done and overall S&P 500 earnings are expected to have climbed 2.3 per cent in the period, according to IBES data from Refinitiv.

In company news, Uber Technologies shares climbed 9.5 per cent after the ride-hailing company laid out an ambitious plan to be profitable by the end of 2020.

Take-Two Interactive Software Inc shares fell 11.9 per cent after the videogame publisher’s adjusted revenue missed estimates.

is content editor for Morningstar Australia

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