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Global Market Report - 3 April

Lex Hall  |  03 Apr 2020Text size  Decrease  Increase  |  
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Australia

A wild week for the Australian sharemarket is set to continue with the local bourse tipped to copy Wall Street's oil-fuelled overnight surge.

The SPI200 futures contract was up 114 points, or 2.22 per cent, at 5250.0 points at 8am Sydney time on Friday, suggesting strong gains for local stocks at the market open.

Wall Street's major indices all closed higher after a coronavirus-driven rise in US unemployment claims was offset by an oil price surge.

European stocks also had a strong session as hopes rose on a truce in the oil price war between Saudi Arabia and Russia.

US President Donald Trump tweeted he had held a constructive call with Saudi Crown Prince Mohammed bin Salman, and expected OPEC+ with Russia to agree to cut oil output by as much as 10 million to 15 million barrels.

An opening rise for local stocks would continue a week of wild swings. 

On Wall St, the Dow Jones Industrial Average rose 469.93 points, or 2.24 per cent, to 21,413.44, the S&P 500 gained 2.28 per cent, and the Nasdaq Composite added 1.72 per cent.

The S&P/ASX200 benchmark index finished Thursday down 104.3 points, or 1.98 per cent, at 5154.3, while the All Ordinaries index dropped 102 points, or 1.93 per cent, to 5,188.7.

The Australian dollar is buying 60.58 US cents, down from 61.84 US cents as the market closed on Thursday.

Asia

China stocks settled higher on Thursday, led by energy shares as crude oil futures jumped on hopes for a deal to end the price war between Saudi Arabia and Russia, and by tech firms.

At the close, the Shanghai Composite index was up 1.69 per cent at 2780.64.

The blue-chip CSI300 index was up 1.62 per cent, with its financial sector sub-index higher by 0.96 per cent, the consumer staples sector up 1.75 per cent, the real estate index higher 0.84 per cent and the healthcare sub-index up 1.48 per cent.

Hong Kong stocks erased earlier losses to close higher on Thursday, led by energy shares as crude oil futures jumped on hopes for a deal to end the price war between Saudi Arabia and Russia.

At the close of trade, the Hang Seng index was up 194.27 points, or 0.84 per cent, at 23,280.06. The Hang Seng China Enterprises index rose 1.29 per cent to 9,526.56.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.13 per cent, while Japan’s Nikkei index closed down 1.37 per cent.

Europe

A late-session rally in the energy sector helped European stocks end slightly higher on Thursday, with sentiment remaining fragile after a sharp rise in US unemployment claims showed further evidence of the coronavirus’ economic impact.

The pan-European STOXX 600 closed a volatile session 0.4 per cent higher, recovering from a sink into negative territory.

The energy sector was the biggest boost to the benchmark, tracking a surge in crude prices on reports that US President Donald Trump expects Russian President Putin and the Saudi Crown Prince to announce an oil production cut.

A price war between Saudi Arabia and Russia, coupled with expectations of lower demand, had sent oil prices plummeting last month, which in turn pushed European energy stocks to 24-year lows.

The sector jumped more than 5 per cent on the day, with heavyweights Royal Dutch Shell, Total and BP adding between 3 per cent and 9 per cent.

Swedish oil and gas explorer Lundin Energy topped the STOXX 600, jumping around 15 per cent.

Still, the US unemployment figures pointed to deep economic ructions from the coronavirus outbreak, fanning concerns over a global recession after data on Wednesday showed factory activity crashing in the euro zone.

European travel and leisure stocks were the worst performers for the day, with cruise operator Carnival plunging more than 20 per cent as it readied a bumper capital raise to help tide it through severe curbs on its business.

Carnival bottomed out the STOXX 600 for a second straight session.

Hays, one of the world’s biggest recruiters, slumped 13 per cent after announcing an emergency 200 million pound ($248.36 million) issue of shares on Thursday.

Technology shares also dropped, with French software firm Dassault Systemes shedding more than 5 per cent after it warned of lower first-quarter revenue.

In Europe, countries including Germany, Spain and Italy have extended lockdowns to try to halt the spread of COVID-19, and analysts expect another earnings recession this year with several firms withdrawing forecasts ahead of the reporting season.

North America

US stocks rallied on Thursday as hopes for a truce in the price war between Saudi Arabia and Russia and a cut in oil output drove gains, taking some sting out of a shocking jump in Americans filing jobless claims due to coronavirus-led lockdowns.

The S&P energy index, down by more than 50 per cent this year due to the Russia-Saudi price war and coronavirus-driven demand worries that has caused oil prices to plunge, climbed 9.08 per cent.

Saudi Arabia has called for an emergency meeting of oil producers, while US President Donald Trump said he expected the kingdom and Russia to cut output by as much as 10 million to 15 million barrels a day. That helped US crude CLc1 futures settle up 24.7 per cent, and Brent up 21.5 per cent, their biggest daily percentage gains on record.

Still, major averages waded into negative territory multiple times before a late rally pushed stocks higher to close near session highs.

“It got beaten up so badly, you don’t rally like this unless it was many people thinking this got overdone,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

The Dow Jones Industrial Average rose 469.93 points, or 2.24 per cent, to 21,413.44, the S&P 500 gained 56.4 points, or 2.28 per cent, to 2526.9 and the Nasdaq Composite added 126.73 points, or 1.72 per cent, to 7487.31.

The list of top gainers on the benchmark S&P 500 was littered with oil companies. Occidental Petroleum surged 18.90 per cent, with names such as Apache Corp and Halliburton also seeing double-digit percentage gains.

A bump in prices may still not be enough to save some of the debt-laden US shale companies that are on the brink of bankruptcy as demand continues to plunge due to the coronavirus pandemic.

Analysts foresee a further decline in US stocks as country-wide shutdowns to limit the spread of the virus result in a virtual halt in business activity and force companies to lay off employees and save cash.

Boeing Co, once a symbol of America’s industrial might, has offered buyout and early retirement packages to employees, sending its shares down 5.68 per cent.

Investors continue to absorb a wave of bad economic news that will continue to paint a grim picture. Initial claims for unemployment benefits last week rose to 6.65 million, exceeding the top end of economists’ estimates at 5.25 million.

As earnings season slowly begins to get underway, Walgreens fell 6.30 per cent after the drugstore retailer reported a steep decline in US same-store sales in the last week of March.

 

 

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