Global Market Report - 6 February
Australian shares are poised for another climb after US and European markets rose on positive economic data and news of a possible coronavirus vaccine.
Australia
Australian shares are poised for another climb after US and European markets rose on positive economic data and news of a possible coronavirus vaccine.
The SPI200 futures contract was up 56 points, or 0.81 per cent, at 6,964 at 8am Sydney time on Thursday.
Markets rose overnight on positive economic data from the US and Europe and as some media reports suggested scientists were developing a vaccine for the coronavirus.
World health experts suggested caution with respect to any potential coronavirus vaccine breakthroughs but positive sentiment continued and China reported that most companies would recommence activity next week, Westpac says in a research note.
Australian retail sales figures and trade balance are due out on Wednesday.
The Australian benchmark S&P/ASX200 index closed Wednesday up 27.4 points, or 0.39 per cent, at 6976.1, while the broader All Ordinaries index lifted 33.3 points, or 0.47 per cent, to 7080.9.
On Wall Street, the Dow Jones Industrial Average rose 483.02 points, or 1.68 per cent, to 29,290.65, the S&P 500 gained 1.13 per cent, and the Nasdaq Composite added 0.43 per cent.
Elsewhere, President Donald Trump was acquitted in his US Senate impeachment trial, saved by fellow Republicans who rallied to protect him nine months before he asks voters in a deeply divided America to give him a second White House term.
The Australian dollar was buying 67.44 US cents at 8am on Thursday, up from 67.36 US cents on Wednesday.
Asia
China stocks climbed on Wednesday as investors bet on further policy support from Beijing to offset the impact of a fast-spreading new coronavirus, with start-ups leading the gains.
At the close, the Shanghai Composite index was up 1.3 per cent at 2818.09, moving further away from a one-year bottom hit during Monday’s selloff. The blue-chip CSI300 index gained 1.1 per cent.
CSI300’s financial sector sub-index was higher by 0.3 per cent, the consumer staples sector rose 1.4 per cent, the real estate index was up 0.4 per cent and healthcare shares rallied 3.3 per cent.
Hong Kong stocks gained for the third straight session on Wednesday as investors bet on further policy support from Beijing to offset the economic impact of a rapidly spreading coronavirus.
At the close of trade, the Hang Seng index was up 0.4 per cent at 26,786.74. The Hang Seng China Enterprises index rose 0.6 per cent.
Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.4 per cent, while Japan’s Nikkei index was up 1 per cent.
Europe
A clutch of upbeat earnings and reports of progress in treatment for the fast-spreading coronavirus helped to push European shares towards record highs on Wednesday.
Drugmaker Novo Nordisk rose 4.6 per cent and industrial company Valmet and chipmaker Infineon both surged more than 10 per cent after results, taking the pan-European stock benchmark STOXX 600 index up 1.2 per cent in its third day of gains.
The index is now just 0.3 per cent shy of record highs hit last month. The rally this week comes after a virus outbreak in China sent markets into a tailspin as investors gauged the potential economic damage from production and supply disruptions.
On Wednesday, reports from China and the UK that researchers are closing in on a vaccine to treat the virus, lifted sentiment as the death toll in China moved closer to 500.
China-exposed sectors such as autos, technology and basic materials were among the strongest performers.
Companies listed on the STOXX 600 are forecast to report 1.2 per cent earnings growth in the fourth quarter, just a touch below the 1.3 per cent growth rate expected last week, according to the latest data from I/B/E/S Refinitiv. This would follow three straight quarters of declining profits.
Data showing an acceleration of euro zone business activity in January, added to the upbeat mood.
But tempering the positive expectations was a near 7 per cent drop in cigarette maker Imperial Brands Plc after it forecast a fall in its first-half profit, while GlaxoSmithKline slipped after missing fourth-quarter earnings forecasts.
Planemaker Airbus fell after the company said it was prolonging a planned closure of its final assembly plant in Tianjin, China, as a result of the coronavirus emergency.
North America
The benchmark S&P 500 posted a record closing high on Wednesday as US stocks rallied for a third straight day on encouraging US economic data and waning fears of the financial fallout from the corona virus in China.
The Nasdaq also notched a record close but steep losses in Tesla shares limited the index’s advance.
The ADP National Employment Report showed private payrolls jumped by 291,000 jobs in January, the most since May 2015, while a separate report showed US services sector activity picked up last month, suggesting the economy could continue to grow moderately this year even as consumer spending slows.
The S&P 500 has more than recovered from last week’s steep losses after China boosted liquidity to limit the economic impact of the coronavirus outbreak.
The Dow Jones Industrial Average rose 483.22 points, or 1.68 per cent, to 29,290.85, the S&P 500 gained 37.1 points, or 1.13 per cent, to 3334.69 and the Nasdaq Composite added 40.71 points, or 0.43 per cent, to 9508.68.
Energy was the best-performing S&P 500 sector, jumping 3.8 per cent along with a rise in crude prices.
The healthcare sector climbed 2.0 per cent, led by health insurers as well as by a 17.5 per cent jump in shares of Biogen after the biotech company won a patent ruling on a multiple sclerosis drug.
Shares of Tesla cooled off after a huge six-day rally, dropping 17.2 per cent after a senior executive warned that the coronavirus outbreak in China would delay deliveries of Model 3 cars made at its Shanghai plant.
The fourth-quarter reporting season for large US companies is more than halfway done, with S&P 500 firms posting a 1.6 per cent rise in earnings for the period, according to IBES data from Refinitiv.
In earnings news, Ford Motor Co shares fell 9.5 per cent after the company delivered a weaker-than-expected 2020 forecast.
Coty Inc shares rose 14.5 per cent after the cosmetics and fragrance maker reported quarterly profit above expectations.
Merck shares dropped 2.9 per cent after the drugmaker said it will spin off its women’s health, biosimilar drugs and older products into a separate publicly traded company.