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Global Market Report - 11 February

Lex Hall  |  11 Feb 2020Text size  Decrease  Increase  |  
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The Australian share market is heading for a rise after positive US data prompted a bounce on Wall Street.

The SPI200 futures contract was up 38 points, or 0.55 per cent, at 6983 at 7am Sydney time on Tuesday.

The S&P/ASX200 benchmark index finished Monday down just 10.1 points, or 0.14 per cent, at 7012.5 while the broader All Ordinaries index dropped 13.4 points, or 0.19 per cent, to 7108.

Overnight Wall Street rebounded on a strong US economic outlook, with the Nasdaq hitting a record high.

The Dow Jones Industrial Average rose 174.31 points, or 0.6 per cent, to 29,276.82, the S&P 500 gained 0.73 per cent and the Nasdaq Composite added 1.13 per cent.

The Australian dollar was buying 66.8 US cents at 7am from 67.01 US cents on Monday.


China stocks closed higher for a fifth straight session on Monday as workers trickled back to offices and factories after the government eased some restrictions on working, while hopes of steps by Beijing to support its economy also aided sentiment.

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The Shanghai Composite index closed 0.5 per cent higher at 2890.49. The blue-chip CSI300 index was up 0.4 per cent.

Hong Kong shares extended losses on Monday, as the rising severity of the coronavirus outbreak in mainland China, where it has killed more than 900 people, fanned fears of a slowdown in global economic growth.

The Hang Seng index was down 0.6 per cent at 27,241.34, falling for a second straight session. The Hang Seng China Enterprises index fell 0.5 per cent.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.4 per cent, while Japan’s Nikkei index closed down 0.6 per cent.


Deal talks and a rally in defensive sectors supported European shares on Monday as investors grappled with the potential impact of the coronavirus, while Irish stocks were hit by a strong showing for the left-wing Sinn Fein in a national election.

The pan-European STOXX 600 index ended 0.07 per cent higher, having marked its best week in three months as part of a broader rebound from an earlier virus-driven sell-off.

NMC Health shot up 24 per cent after revealing preliminary buyout approaches from private equity firms KKR and GK Investment, while Italy’s Exor hit an all-time high after saying it is in talks to sell reinsurer PartnerRe in a deal that could be worth about $9 billion.

At the other end of STOXX 600 were Irish lenders Bank of Ireland and AIB Group, sliding 8.3 per cent and 6 per cent, respectively as investors feared a negative impact from Sinn Fein’s policies, which include an end to tax breaks for banks.

Ireland's main index dropped 1.2 per cent as significant differences in the manifestos of the three main political parties reduced hopes among investors for a smooth formation of a new government.

Oil stocks were the worst performers in Europe, while commodity linked stocks also slid as crude, iron ore and copper prices fell on worries over weaker Chinese demand in the wake of the coronavirus outbreak.

The virus has taken more than 900 lives in China, exceeding the death toll from the SARS outbreak over decades ago and analysts are attempting to quantify the economic fallout from production and supply disruptions from suspended operations in the country.

Data on Monday showed such fears had hit investor morale in the euro zone - down for the first time in four months in February.

Automakers, among the most exposed to China, slumped 0.8 per cent. BMW, Volkswagen, Peugeot owner PSA and Renault all slipped more than 1 per cent, weighing on the German and French indexes.

While Germany’s economy may be the most hit by the outbreak, it could also be the one that benefits the most when China rolls out massive stimulus to support its economy, said Andrea Cicione, head of strategy at TS Lombard. A need to ramp up infrastructure may see it tap Germany’s expertise, he said.

Defensive sectors such as healthcare, real estate and utility stocks - which investors turn to during times of turbulence - rose more than 0.3 per cent.

North America

The S&P 500 and the Nasdaq closed at record highs on Monday as Chinese workers and factories slowly returned to business following a Lunar New Year holiday that was protracted by the deadly coronavirus outbreak.

All three major US stock averages advanced in a broad-based rally, boosted by index leaders Amazon.com, Microsoft Corp and Alphabet Inc.

Worries over the coronavirus kept market participants on edge, with the death toll rising to 908 and the World Health Organisation warning that new cases outside of China could be “the spark that becomes a bigger fire.”

But generally upbeat earnings, positive economic data and China’s recent stimulus have attracted buyers to the US equities market.

Tesla Inc’s stock rose 3.1 per cent after its Shanghai factory resumed production, and iPhone maker Foxconn re-started a key plant in China with 10 per cent of its workforce.

That is cold comfort for Apple, whose iPhone sales in China could plunge by as much as 50 per cent due to the virus, according to analysts.

The fast-spreading coronavirus has now caused more deaths than the 2002-2003 SARS outbreak, and has affected a broad range of companies and sectors.

The Dow Jones Industrial Average rose 174.31 points, or 0.6 per cent, to 29,276.82, the S&P 500 gained 24.39 points, or 0.73 per cent, to 3352.1 and the Nasdaq Composite added 107.88 points, or 1.13 per cent, to 9628.39.

Of the 11 major sectors in the S&P 500 all but energy ended the session in the black, with technology and consumer discretionary shares posting the largest percentage gains.

Fourth-quarter reporting season is approaching the final reel, with 324 of the companies in the S&P 500 having reported. Of those, 70.7 per cent have beat Street estimates, according to Refinitiv data.

Analysts now see aggregate year-on-year fourth-quarter earnings growth of 2.3 per cent, a reversal from the 0.3 per cent decline analysts projected on Jan 1.

Mall operator Taubman Centers Inc jumped 53.2 per cent on news that it would be bought by larger rival Simon Property Group Inc in a deal valued at $3.6 billion. Simon Property Group’s shares inched up 1.4 per cent.

Eli Lilly dropped 0.6 per cent after experimental Alzheimer’s treatments from the US pharmaceutical firm and Switzerland’s Roche failed to halt the disease.

is senior editor for Morningstar Australia

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