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Global Market Report - 24 April

Lex Hall  |  24 Apr 2020Text size  Decrease  Increase  |  
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Australia

Australian stocks appear set for a flat morning after mixed movements on Wall Street overnight.

The SPI 200 futures contract was up by 12 points, or 0.23 per cent, to 5,218.0 at 8am Sydney time on Friday.

IG Markets analyst Kyle Rodda said he expected a "soft" opening for the ASX/200, with the index likely to lose five points at the start of trade.

US markets enjoyed a rally until news that an experimental coronavirus drug flopped in its first randomised clinical trial.

The Chinese trial showed Gilead Science's remdesivir did not improve patients' condition or reduce the pathogen's presence in the bloodstream.

The S&P 500 finished at 2,797.80, down 1.51 points.

The Dow Jones Industrial Average rose 39.44 points, or 0.2 per cent, to 23,515.26 after losing almost all of a 409-point gain. The Nasdaq composite slipped 0.63 points to 8,494.75.

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The early gains were likely based on data showing the number of US workers filing for unemployment in the past week was 4.4 million, a lower figure than the 5.2 million the previous week.

Traders' fortunes followed a similar day in Australia on Thursday.

The benchmark S&P/ASX200 index gained early but closed down 4.1 points, or 0.08 per cent, at 5,217.1 points.

The All Ordinaries closed down one point, or 0.02 per cent, at 5,272.8 points.

The Australian dollar was buying 63.72 US cents at 8am, up from 63.43 US cents at Thursday's close.

The Aussie gold price was $US1729.54 at 8.10am.

Asia

Chinese stocks ended weaker on Thursday, as mounting economic uncertainty sparked by the coronavirus pandemic kept share prices under pressure, stopping investors from chasing the rebound from the previous session.

The Shanghai Composite index closed 0.2 per cent lower at 2,838.50. 

The blue-chip CSI300 index ended down 0.3 per cent, with its financial sector sub-index down 0.3 per cent, the consumer staples sector up 0.3 per cent, the real estate index and healthcare shares flat. 

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.6 per cent, while Japan's Nikkei index closed up 1.5 per cent, as oil prices recovered and the US pledged more public spending.

Europe

A rally in energy and bank shares lifted European stock markets on Thursday, while investors counted on more stimulus to revive the bloc’s economy as the coronavirus-induced lockdowns brought activity to a halt in April.

The pan-European STOXX 600 was up 0.9 per cent, recovering for a second straight day as oil prices edged higher after collapsing at the start of the week. 

The energy index jumped 3 per cent, with Total, BP and Royal Dutch Shell providing the biggest boost to the STOXX 600.

Kicking off the first-quarter earnings season for the big European lenders, Credit Suisse Group AG’s net profit topped expectations, but the bank followed its American peers in bulking up for potential loan losses due to the pandemic.

Credit Suisse’s shares rose 2.3 per cent and most other regional banks rallied, taking the bank’s index 3 per cent higher.

All other major European sectors traded higher, even as data showed economic activity in the euro zone ground to a halt in April, with several sectors idling plants and furloughing staff.

Across the Atlantic, data showed US jobless claims topped 26 million in the past five weeks, but slowed last week compared with the previous week. Wall Street’s main indexes traded over 1 per cent higher.

Focus is instead on the various exit strategies and the stimulus initiatives by governments and central banks, said Olivier Konzeoue, FX sales trader at Saxo Markets.

A decision from a meeting of European Union leaders regarding jointly financing a recovery is expected later on Thursday. Washington, meanwhile, is preparing to approve another $US500 billion to support small businesses and hospitals.

The STOXX 600 has bounced this month after hitting eight-year lows in March, as trillions of dollars in global stimulus brought back bargain hunters.

Consumer goods giant Unilever tumbled as much as 5.5 per cent to its lowest in three weeks after pulling its 2020 profit forecast, saying it could not “reliably assess the impact” of the pandemic on its business.

Sweden’s AB Volvo shed 5.6 per cent and was on course for its worst day in a week after warning of stalling truck orders and a challenging adjustment to a “new normal” of feebler demand.

Topping the pan-regional index were British homebuilders Taylor Wimpey and Vistry after they announced plans to restart construction work in the next two weeks. 

North America

The S&P 500 ended marginally lower on Thursday after a report that an experimental antiviral drug for the coronavirus flopped in its first randomised clinical trial, denting earlier optimism that the impact of the pandemic on the labor market was nearing an end.

All three main US stock indexes fell back from gains of over 1 per cent after the Financial Times reported that a Chinese trial showed that Gilead Science’s remdesivir did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream.

Gilead said the results from the study were inconclusive as it was terminated early.

Last Friday, Wall Street rallied in part because of a report that COVID-19 patients in a separate study had responded positively to remdesivir.

The market’s sensitivity to news related to coronavirus therapies reflects investors’ desperation for any indication of when the global economy might be able to start returning to normal.

“The hope as of last week was that Gilead could take the fear of dying off the table, which would result in a much quicker, cleaner, faster recovery. If that’s less likely today than it was yesterday, it is perfectly reasonable for the market to have sold off,” said David Katz, chief investment officer at Matrix Asset Advisors.

Stocks rallied earlier in the session after data that showed weekly US jobless claims fell to 4.43 million from a revised 5.24 million. However, the numbers were still staggering, taking the total in the past five weeks to a record 26 million and wiping out all the jobs created since the financial crisis.

“The disappointing drug news stings, but considering another 4 million people lost their jobs, the disconnect between how well stocks have held up in the face of historically bad economic data continues,” said Ryan Detrick, senior market strategist at LPL Financial.

Meanwhile, the US congress was preparing nearly $US500 billion more in aid for small businesses and hospitals, which was expected to clear the House of Representatives later in the day.

The energy index rose 3 per cent, easily leading the 11 S&P 500 sectors as oil prices recovered in a tumultuous week that saw US crude futures crash below zero for the first time in history.

US stock indexes have rallied this month on a raft of global stimulus, but the benchmark S&P 500 remains more than 15 per cent below its record high as worsening economic indicators foreshadow a deep global recession.

A survey showed US business activity plumbed new record lows in April, mirroring dire figures from Europe and Asia as strict stay-at-home orders crushed production, supply chains and consumer spending.

The CBOE volatility index has retreated from 12-year peaks hit last month, but remains well above levels seen in the past two years and analysts have warned of another sell-off as corporate America issues worrying forecasts for the year.

The Dow Jones Industrial Average rose 0.17 per cent to end at 23,515.26 points, while the S&P 500 lost 0.05 per cent to finish at 2,797.8.

The Nasdaq Composite slipped 0.01 per cent to 8,494.75.

Las Vegas Sands Corp jumped 12 per cent after the casino operator predicted a speedy recovery in Asia on pent-up gambling demand.

is senior editor for Morningstar Australia

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