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Global Market Report - 21 February

Lex Hall  |  21 Feb 2020Text size  Decrease  Increase  |  
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Australian shares are poised to open softer following a record high on the local market and after US markets soured following a rise in coronavirus cases.

The SPI200 futures contract was down 3 points, or 0.04 per cent, at 7113 at 8.20am Sydney time on Friday.

The Australian benchmark S&P/ASX200 index finished on Thursday up 17.9 points, or 0.25 per cent, at a closing record of 7162.5 after setting an intraday record of 7197.2.

But the mood in equity markets soured as coronavirus fatalities outside China rose and company earnings reflected the pandemic’s impact, Westpac’s finance markets morning note says.

The Dow Jones Industrial Average fell 130.79 points, or 0.45 per cent, to 29,217.24, the S&P 500 lost 0.39 per cent, and the Nasdaq Composite dropped 0.67 per cent.

European markets closed lower.

The Australian dollar was buying US66 cents, down from US66.47 cents on Thursday.


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Chinese stocks closed at a fresh one-month high on Thursday, boosted by a widely-expected cut in the benchmark prime lending rate and a slower rate of new coronavirus infections in the country.

The Shanghai Composite index ended 1.8 per cent higher at 3030.15, its highest closing level since 22 January.

The blue-chip CSI300 index rose 2.3 per cent, hitting its highest level since Jan. 21 during the session, and marked the largest daily gain in more than two weeks.

Hong Kong stocks ticked lower on Thursday, as a rapid rise in new coronavirus cases outside mainland China outweighed optimism over Beijing’s widely-anticipated interest rate cut.

At the close of trade, the Hang Seng index was down 0.2 per cent at 27,609.16. The Hang Seng China Enterprises index rose 0.1 per cent.

The sub-index of the Hang Seng tracking energy shares rose 0.5 per cent, the IT sector gained 0.4 per cent and the financial sector was flat.

Japanese stocks ended higher on Thursday as a rapidly weakening yen, which hit a near 10-month low versus the dollar overnight, lifted export-focused carmakers, but the gains were capped by concerns over the impact of the coronavirus outbreak.

The benchmark Nikkei average ended up 0.3 per cent at 23,479.15, while the broader Topix added 0.2 per cent to 1,674.48.


European shares eased from record highs on Thursday, as a raft of disappointing earnings added to concerns about the global impact of the coronavirus outbreak after research suggested the illness is more contagious than previously thought.

The pan-European STOXX 600 shed 0.9 per cent, deepening losses just before close to post their biggest one-day drop in three weeks.

A near 2 per cent fall in insurance stocks led losses after Swiss Re posted a lower-than-expected annual profit. The reinsurer’s shares dropped 8.1 per cent to a five-week low.

A slide in Spain's Telefonica weighed on the Spanish index after the telecoms group said one-off charges in Mexico and Argentina hurt its annual profit

Meanwhile, France’s Schneider Electric rallied to an all-time high after its results beat expectations and the firm said it was confident it could offset the impact of the new coronavirus outbreak in China.

But Paris' main index fell 0.8 per cent as luxury stocks, which derive a chunk of their demand from Chinese customers, fell after a spike in the number of coronavirus cases outside China.

LVMH, Kering and spirits maker Pernod Ricard slid between 2.2 per cent and 3.5 per cent.

New research suggested the virus could spread more easily than previously believed, with South Korea and Iran reporting more cases of infection, while two passengers in a virus-hit cruise ship in Japan died.

European equity investors also await flash readings of the Purchasing Managers’ Index (PMI) on manufacturing activity in the euro zone, due on Friday.

While traders foresee a hit to the Chinese economy from the health crisis, expectations of a pickup in growth from the second quarter have kept equity markets near record highs.

The benchmark STOXX 600 index has bounced back from a slight dip in January and is on course for its best monthly gain in a year.

Among other individual movers, British medical tech firm Smith & Nephew jumped 7.3 per cent as its annual sales topped estimates and it forecast another year of revenue growth. Norwegian technology firm Tomra Systems surged 19 per cent to top the STOXX 600 on strong quarterly results.

Insurer AXA fell 3.5 per cent as it lowered 2020 profit guidance for its companies-focused XL unit, while medical equipment maker Elekta slid after its quarterly operating profit undershot expectations.

The auto index was the sole sectoral gainer in Europe with Renault up 3 per cent while Daimler rose 2.3 per cent after saying it would slim down its Mercedes management to remove duplicate layers between Mercedes-Benz and Daimler.

North America

US stocks fell on Thursday, led by declines in technology heavyweights, after reports of new coronavirus cases in China and other countries intensified fears over its spread and impact on the global economy.

Investors were unnerved by a sharp late-morning drop that took the S&P 500 briefly down more than 1 per cent on the day, with some traders attributing the move to a Global Times report that a central Beijing hospital had reported 36 new cases. This raised worries about a potential increase in infections in the Chinese capital.

Investors were already skittish after Japan reported two new deaths and South Korea reported a rise in new infections. Research suggested the virus was spreading more quickly than previously thought.

He said it appeared investors were taking profits in some high-flying technology names and buying shares of other groups, including small caps. The Russell 2000 index ended up 0.2 per cent on the day.

The S&P 500 technology index lost 1 per cent on the day. The index has led gains in the S&P 500 so far this year and is still up more than 10 per cent since 31 December. Shares of Microsoft Corp, Apple and Amazon.com Inc fell and were among the biggest drag on the S&P 500 on Thursday.

The Dow Jones Industrial Average fell 128.05 points, or 0.44 per cent, to 29,219.98, the S&P 500 lost 12.92 points, or 0.38 per cent, to 3373.23 and the Nasdaq Composite dropped 66.22 points, or 0.67 per cent, to 9750.97.

Recent policy easing by China, a largely better-than-expected fourth-quarter earnings season and hopes that the economic jolt from the coronavirus will be short-lived have pushed Wall Street’s main indexes to new highs in recent weeks.

E*Trade jumped 21.8 per cent after Morgan Stanley offered to buy it in a $13 billion stock deal, the biggest acquisition by a Wall Street bank since the financial crisis.

In other corporate news, ViacomCBS Inc slumped 17.9 per cent as its earnings fell short of revenue and profit expectations in its first quarterly earnings results since closing its merger.

is senior editor for Morningstar Australia

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