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Global Market Report - 22 April

Lex Hall  |  22 Apr 2020Text size  Decrease  Increase  |  
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Australia

Trade on the Australian share market is likely to be marred by more losses in oil prices, as demand plunges due to the coronavirus pandemic.

The SPI 200 futures contract was down 109 points, or 2.1 per cent, at 5,090.0 at 8am Sydney time on Wednesday following heavy losses overnight on Wall Street.

The S&P 500 lost 3.1 per cent for its worst drop since 1 April.

Losses were widespread, with 94 per cent of stocks in the index down.

This followed similar declines across Europe and Asia.

The cost for a barrel of US oil to be delivered in June plunged 43 per cent overnight to $US11.57 dollars.

A day earlier, oil futures fell below zero for the first time.

Fewer people are driving and flying due to travel restrictions in many countries designed to slow the spread of the virus.

The S&P/ASX200 benchmark index finished Tuesday trade down 131.7 points, or 2.46 per cent, to 5,221.3 points.

The All Ordinaries index ended the day lower by 134.5 points, or 2.45 per cent, to 5,353.0 points.

Australian Bureau of Statistics data indicated the number of Australians with a job had fallen by 6.0 per cent since the coronavirus crisis began.

The Australian dollar was buying 62.86 US cents at 8am, down from 63.22 US cents at Tuesday's close.

Asia

China shares closed lower on Tuesday, as caution recaptured world markets after US crude futures recorded a historic plunge overnight, prompting investors to stay away from riskier assets.

At the close, the Shanghai Composite index was down 0.9 per cent at 2,827.01, narrowing early losses.

The blue-chip CSI300 index was down 1.18 per cent, with its financial sector sub-index ending lower by 1.05 per cent, the consumer staples sector down 1.64 per cent, the real estate index down 1.27 per cent and the healthcare sub-index closed 1 per cent weaker.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 2.14 per cent, while Japan’s Nikkei index closed down 1.97 per cent.

Europe

European stocks fell on Tuesday as the double whammy from a historic plunge in US crude prices and lacklustre quarterly earnings reports spooked investors already worried about the damage to the global economy from the coronavirus pandemic.

The pan-European STOXX 600 index broke a three-session winning streak to end 3.4 per cent lower.

Basic materials stocks were the biggest decliners, losing almost 6 per cent. The world’s largest listed miner BHP Group slid after warning of a sharp drop in global steel production excluding China due to the COVID-19 pandemic.

All the major European country indexes slipped, a day after US crude futures CLc1 plummeted to below zero for the first time in history with rapidly filling storage capacity causing traders to flee contracts that would deliver oil barrels to them in May.

The West Texas Intermediate contract recovered to trade above $1 on Tuesday but its collapse spilled into June futures contracts as investors fretted over a deep global recession with the near halt in business activity crushing both supply chains and oil demand.

BP, Royal Dutch Shell and Total lost between 2.5 per cent and 3.8 per cent, taking the energy index 4.3 per cent lower.

The STOXX 600 had recovered about 25 per cent from a March trough as risk appetite picked up on a raft of global stimulus, but investors have turned cautious again with economic data underlining the havoc wreaked by sweeping lockdown measures.

The ZEW survey on German economic sentiment did however surprise with a rise but investors took little solace from the data and Germany's DAX led losses in the region, down 4 per cent.

Europe’s most valuable tech company SAP was among the biggest drags on the benchmark STOXX 600 after the company abruptly ended a six-month experiment in dual leadership due to the pandemic.

The first-quarter earnings season also kicked into high gear with a batch of multinational firms scrapping dividends and withdrawing financial forecasts to deal with the fallout from the pandemic.

Finland’s Wartsila’s first quarter profit dropped 45 per cent, while Primark owner Associated British Foods slipped after suspending its interim dividend.

But not all earnings were bad. Topping the pan-region index was online payments firm Adyen after it reported growth in revenue and core earnings for the first quarter.

North America

US shares tumbled for a second straight day as a collapse in US oil prices and glum forecasts by companies worsened fears of a deep economic downturn.

All 11 S&P 500 sector indexes fell 1.6 per cent or more on Tuesday, with energy sliding for the seventh time in eight sessions a day after the WTI contract crashed below zero as oil traders ran out of storage for May deliveries.

With the collapse spilling into June futures contracts, equity investors became wary of the extent of the economic damage from sweeping lockdown measures that have halted business activity and sparked millions of layoffs.

The S&P information technology index slumped 4.1 per cent, while the financial index dropped 3.2 per cent.

After many companies pulled their forecasts because of uncertainty related to the coronavirus, investors will focus in the coming days on first-quarter reports for signs of how badly the pandemic is hurting US corporations.

The benchmark S&P 500 index has climbed over 20 per cent from its March low, powered by trillions of dollars in stimulus, but it remains nearly 20 per cent below its February record high due to fears of devastating economic damage caused by the coronavirus.

US jobless claims hit 22 million in the past month as companies launched dramatic cost-saving measures to ride out the slump, and readings of US business activity surveys, due on Thursday, are likely to plummet to recession-era lows.

Coca-Cola Co provided the latest evidence of the damage wrought by the global health crisis, saying its current-quarter results would take a severe hit from low demand for its soft drinks. Its stock fell 2.5 per cent.

International Business Machines Corp fell 3 per cent after the company withdrew its 2020 annual forecast late on Monday.

In extended trade, Netflix surged 2.6 per cent after the streaming video company reported more paid subscribers than expected in the first quarter.

Also after the bell, Texas Instruments rose 3.0 per cent following its quarterly report.

The Dow Jones Industrial Average fell 2.67 per cent to end at 23,018.88 points, while the S&P 500 lost 3.07 per cent to 2,736.57.

The Nasdaq Composite dropped 3.48 per cent to 8,263.23.

is content editor for Morningstar Australia

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