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Global Market Report - 23 April

Lex Hall  |  23 Apr 2020Text size  Decrease  Increase  |  
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Australia

Traders on the Australian share market are expected to follow a rally on Wall Street overnight after world oil prices rose.

The SPI 200 futures contract was higher by 49 points, or 0.94 per cent, at 5,286.0 at 8am Sydney time on Thursday.

US crude and benchmark Brent prices climbed after a collapse in the past two days, sending the S&P 500 energy index up 3.6 per cent.

Brent crude, the international standard, climbed 5.4 per cent to 20.37 dollars per barrel.

The Dow Jones Industrial Average, the Nasdaq and S&P 500 all finished trade 2.0 per cent or more higher.

In Australian data on Thursday, the Bureau of Statistics will publish its estimate of the March trade balance.

Experts have tipped exports and imports to be lower due to coronavirus travel restrictions and trade disruptions, although exports will be helped by iron ore shipments.

In Australia on Wednesday, the S&P/ASX200 index recovered from a poor start to finish only 0.1 points lower at the close of trade, at 5,221.2 points.

The Australian dollar was buying US63.16 cents, down from US63.31 cents at Wednesday’s close.

Asia

China stocks reversed course to close higher on Wednesday, as investors hoped the government would speed up rolling out further fiscal stimulus to shore up an economy that has been hobbled by the coronavirus pandemic.

At the close, the Shanghai Composite index was up 0.6 per cent at 2,843.98. The blue-chip CSI300 index was up 0.82 per cent, with its financial sector sub-index ending 0.01 per cent higher, the consumer staples sector up 3.03 per cent, the real estate index up 0.29 per cent and the healthcare sub-index up 2.04 per cent.

In Hong Kong, the Hang Seng index was up 99.81 points, or 0.42 per cent, at 23,893.36. The Hang Seng China Enterprises index rose 0.57 per cent to 9,670.2.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.57 per cent, while Japan’s Nikkei index closed down 0.74 per cent.

Europe

A rebound in oil prices and hopes of more stimulus lifted European shares on Wednesday, even as investors remained cautious about a swift recovery as more companies issued worrying financial forecasts.

The pan-European STOXX 600 index finished up 1.8 per cent after tumbling more than 3 per cent on Tuesday following a historic collapse in oil prices.

Oil prices rose on the prospect of pledges of extra output cuts, and optimism from the recovery spilled in to most other commodity markets.

BP Plc and Royal Dutch Shell along with France’s Total surged between 4.8 per cent and 6.8 per cent, helping the regional energy index make up most of its losses this week.

Along with a more than 3 per cent jump in global miners BHP and Rio Tinto, London's FTSE 100 surged 2.3 per cent.

Italy's main index ended 1.9 per cent higher after Prime Minister Giuseppe Conte said Italy is likely to start easing its coronavirus lockdown from May 4.

The benchmark STOXX 600 has bounced about 21 per cent from a March low, powered by aggressive global stimulus, and all eyes are now on a European Union summit on Thursday to discuss using a joint long-term budget to restart economic growth.

On the same day, the US House of Representatives is expected to clear a $US484 billion relief package. Wall Street stock indexes bounced after the Senate approved the package on Tuesday.

But the STOXX 600 still remains about 24 per cent below its February record high as strict stay-at-home orders virtually shut down business activity and crush supply chains and consumer spending, foreshadowing a deep economic slump.

Gucci-owner Kering slumped almost 5 per cent after saying sales were hit hard early in the coronavirus crisis due to the fashion group’s reliance on Chinese customers and that it was premature to say how quickly China sales would rebound.

Analysts now estimate earnings at STOXX 600 companies to slide 37 per cent in the second quarter and 27.6 per cent in the third, quashing earlier expectations that an earnings recession would end in 2019.

Banking shares gained about 2.6 per cent, even as the region’s top lenders prepared to follow their American peers in setting aside billions to cover potential loan losses due to the coronavirus outbreak.

Roche Holding rose 2.7 per cent as the Swiss drugmaker confirmed its 2020 sales and profit outlook amid rising demand for its new COVID-19 tests.

North America

Wall Street surged on Wednesday as oil prices recovered and congress looked on course to approve nearly $US500 billion more in aid to help small businesses ride out the coronavirus crisis.

US crude and benchmark Brent prices climbed after a collapse in the past two days, sending the S&P 500 energy index up 3.6 per cent.

All 11 S&P 500 sector indexes traded higher as the US Senate unanimously approved the new relief package, adding to trillions of dollars in stimulus that have helped Wall Street rebound from its March lows.

The House of Representatives is expected to clear the bill on Thursday.

The benchmark S&P 500 is 17 per cent below its February record high as state-wide shutdowns have sparked lay-offs and crushed consumer spending, putting several industries at risk of collapse.

Estimates for US jobless claims for the latest week ranged as high as 5.5 million, while a reading on April US factory activity was likely to fall to levels last seen during the 2008 financial crisis. Both reports are due on Thursday.

Analysts have drastically cut their S&P 500 earnings expectations for the first and second quarters and are now projecting a corporate recession for 2020, according to IBES data from Refinitiv.

A week after the big US banks issued dismal 2020 forecasts, consumer discretionary and technology firms fared slightly better as the lockdown measures boosted demand for online streaming and home delivery of meals.

Burrito chain Mexican Grill Inc jumped about 14 per cent after it reported soaring digital and home delivery sales and said it had enough cash and liquidity to get through the next year.

Netflix Inc more than doubled its own projections for new customers in the first quarter. However, its shares fell 2.9 per cent as it forecast a weaker second half if the lockdown measures are lifted.

The Russell 2000 index of US small-cap stocks rallied 1.3 per cent but it remains down nearly 30 per cent from its February high, reflecting smaller companies' recent underperformance to Wall Street's largest firms.

With volatility the new normal on Wall Street, the Dow Jones Industrial Average was up 1.99 per cent at 23,475.82 points, while the S&P 500 gained 2.29 per cent to 2,799.31.

The Nasdaq Composite added 2.81 per cent to 8,495.38.

is content editor for Morningstar Australia

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