Australia

Australian stocks are poised to claw back ground lost as the market posted its worst day for 2020 amid profit warnings and continuing fears about the deadly virus outbreak in China.

The SPI200 futures contract was up 21 points, or 0.3 per cent, at 7050 at 8am Sydney time on Friday.

Local shares fell on Thursday for just the fourth time in 2020 after days of record highs.

The materials and industrials sector led the losses as traders pondered the potential impact of the coronavirus on markets.

The benchmark S&P/ASX200 index closed down 44.7 points, or 0.63 per cent, at 7088 points while the broader All Ordinaries index was down 50 points, or 0.69 per cent, at 7199.

On Wall Street, the Dow Jones Industrial Average fell 0.09 per cent, the S&P 500 gained 0.11 per cent, and the Nasdaq Composite added 0.2 per cent.

The US dollar was buying 68.43 cents at 8am.

Asia

China stocks fell about 3 per cent on Thursday, their biggest single-day loss in nearly nine months, as investors unloaded shares related to restaurants, cinemas, airlines and theme parks after a lockdown in the central city of Wuhan to curb a SARS-like virus.

Authorities in Wuhan, the epicentre of the new coronavirus outbreak that has killed 17 and infected nearly 600 people, shut urban transport networks and suspended outgoing flights.

The drastic measures spooked investors who scrambled for safe haven in bonds.

China’s blue-chip index CSI300 tanked 3.1 per cent to 4,003.90 points, posting its biggest one-day loss in nearly nine months. Shanghai stocks lost 2.8 per cent to 2,976.53 points.

In Hong Kong, the Hang Seng index dropped 1.7 per cent to 27,872.79, having touched the lowest level in a month. The Hong Kong China Enterprises Index lost 2.1 per cent to 10,942.80.

In Japan, investors were wary ahead of corporate earnings, pushing the Nikkei share average down 1.0 per cent to 23,795.44, its lowest closing level since 10 January. The broader Topix fell 0.8 per cent to 1730.50.

Europe

Euphoric stock markets celebrated the China-US trade truce by marking record highs but European auto shares continue to suffer, reflecting the stress the industry is under and fears US President Donald Trump will target Europe next.

There’s no shortage of issues which could trigger a fresh trade row between the continent and the US, from plans for a tax on big digital companies like Amazon and Facebook and subsidies for Airbus, to the involvement of China’s Huawei in building 5G networks and different approaches to tackling Iran’s nuclear program.

Autos look particularly vulnerable, and this week’s meeting of world leaders in the Swiss mountain resort of Davos gave Trump his latest stage from which to threaten a 25 per cent tariff on car imports from the European Union, if the bloc doesn’t agree to a trade deal.

Tariffs would be an additional blow as carmakers struggle with an auto industry downturn, particularly in key market China, and the need to increase electric vehicle investment as several countries move to eventually ban combustion engines.

On Thursday, auto stocks were among the top fallers in Europe, down 2 per cent, making them the worst sectoral performers so far in 2020.

Last year, they fell 17 per cent while the broader European Stoxx 600 index had its best year in a decade with a 23 per cent rise.

Since late last year, auto shares also have decoupled from Germany's DAX, the export oriented index of Europe's largest economy, plunging to a 10-year low relative to the index.

While the signing of a phase-one trade deal between Washington and Beijing has removed some of the uncertainty hanging over markets and dampening global business sentiment, the relief could prove short-lived for Europe if Trump’s attention shifts, leaving German luxury cars first in the firing line.

Evercore ISI has estimated that VW faces a 2.5 billion euro hit if the US imposes 25 per cent tariffs on EU imports, with Daimler facing a 2 billion-euro blow and BMW 1.7 billion euros.

The US is the main export destination for EU-made cars. According to Eurostat, cars from the bloc accounted for 29 per cent of total US auto imports in 2018, well ahead of China’s 17 per cent.

However, he added that while European carmakers are commonly used as a proxy for trade tensions with the US, the risk that they won’t be able to curb emissions in time to abide by new EU rules was also weighing on the sector.

Daimler’s latest profit warning on Wednesday, one in a long line from European auto and auto parts makers, highlighted the stress the sector is under, Kaloyan said, adding that the expected upswing in global auto sales may also disappoint.

North America

The S&P 500 ended slightly higher and the Nasdaq eked out a record closing high on Thursday, helped by a jump in Netflix, while news about the coronavirus outbreak spreading from China and mixed earnings results kept a lid on the market.

The S&P and the Nasdaq had both been trading down before news late in the session that Gilead Sciences Inc was assessing its experimental Ebola drug as a possible treatment for the virus.

The Dow ended modestly lower.

Even as health officials in China put millions of people on lockdown in efforts to contain the coronavirus outbreak, which has so far claimed 18 lives, the World Health Organisation said it was “a bit too early” to declare a global health emergency.

The outbreak has strained global equity markets, just as millions of Chinese are preparing to travel for the Lunar New Year, which begins Saturday.

The fourth-quarter reporting season is gathering steam, with analysts now expecting fourth-quarter earnings to contract by 0.7 per cent from a year ago. Of the 74 companies in the S&P 500 that have already posted results, 67.6 per cent have beaten consensus expectations, according to Refinitiv data.

The Dow Jones Industrial Average fell 26.18 points, or 0.09 per cent, to 29,160.09, the S&P 500 gained 3.79 points, or 0.11 per cent, to 3325.54, and the Nasdaq Composite added 18.71 points, or 0.2 per cent, to 9402.48.

Of the 11 major sectors in the S&P 500, six closed in the red. Healthcare .SPXHC was the biggest percentage loser, while industrials enjoyed the largest gain.

Insurance bellwether Travelers Cos Inc reported a better-than-expected quarterly profit, with underwriting gains tripling and catastrophe losses falling. Nevertheless, the company’s shares dropped 5.1 per cent, and were the biggest drag on the blue-chip Dow.

Comcast Corp beat Street estimates but lost more subscribers than analysts expected, sending its shares down 3.8 per cent.

Freeport-McMoRan results also came in above expectations, but investors focused on the mining company’s drop in Indonesia production. Its stock fell 2.8 per cent.

Among winners, Union Pacific Corp gained 3.5 per cent after the rail operator said the Phase 1 US-China trade pact should reverse slumping volumes.

Netflix jumped 7.2 per cent, rebounding from losses sparked by a disappointing forecast earlier in the week.