According to an article published in the Financial Review, Australian shares were poised to open higher as the S&P 500 and Nasdaq powered to record highs and on reports that efforts to find a cure for the coronavirus were successful. The WHO dismissed the reports.
Share Market Scenario
- ASX futures were up 56 points or 0.8% to 6963 near 8.30am AEDT. The local currency edged up 0.1%.
- Shares closed higher across Europe and in New York, after the release of a mix of positive economic data. The Dow paced gains on Wall Street, with UnitedHealth Group, IBM and Exxon Mobil each advancing at least 4.5%. Boeing rose 3.5%.
- The benchmark S&P 500 posted a record closing high. The Nasdaq also notched a record close though steep losses in Tesla shares limited the index’s advance.
Among the overnight economic reports: euro zone services activity improved last month; US private payrolls came in better than expected; and the US services sector began the year on a good note.
In contrast, some of the air came out of Tesla’s stock; it was down 17.5% after it said car deliveries in China would be delayed. Canaccord Genuity cut its rating on Tesla to “hold” from “buy,” further shrinking the already small number of analysts who recommend buying the stock.
It wasn’t just equities which rallied overnight. Three-month copper on the London Metal Exchange hit $US5769 a tonne, its highest since January 27, before paring gains. It closed 1.9 per cent firmer at $US5722 in final open-outcry trading.
Coronavirus scientific breakthrough
A Chinese TV report said researchers at Zhejiang University had found an effective drug for the virus, while Britain’s Sky News said researchers had made a “significant breakthrough” in developing a vaccine.
The World Health Organisation though played down the reports.
“There are no proven effective therapeutics for novel coronavirus,” Dr Mike Ryan, executive director of WHO emergencies programme, told a news conference in Geneva.
Hundreds of experts will meet in Geneva next week to set research and development priorities for coronavirus drugs, diagnostics and vaccines to combat the outbreak.
WHO director-general Tedros Adhanom Ghebreyesus said a multinational WHO-led team would go to China very soon to work with Chinese authorities in tackling the outbreak. He gave no details.
The past 24 hours had seen the most cases in a single day since the outbreak started.
Market highlights
- ASX futures up 56 points or 0.8% to 6963 near 8.30am AEDT
- AUD +0.1% to 67.46 US cents
- On Wall St: Dow +1.7% S&P 500 +1.1% Nasdaq +0.4%
- In New York: BHP +1.3% Rio +1.3% Atlassian -3.6% Tesla -17.2%
- In Europe: Stoxx 50 +1.2% FTSE +0.6% CAC +0.9% DAX +1.5%
- Nikkei 225 futures +1.4% Hang Seng futures +0.7%
- Spot gold +0.3% to $US1558.07 /oz at 12.26pm NYC
- Brent crude +4% to $US56.10 a barrel
- US oil +4% to $US51.59 a barrel
- Iron ore -2.9% to $US81.31 a tonne
- Dalian iron ore -1.5% to 578 yuan
- LME aluminium +1.8% to $US1717 a tonne
- LME copper +1.9% to $US5722 a tonne
- 2-year yield: US 1.44% Australia 0.74%
- 5-year yield: US 1.46% Australia 0.75%
- 10-year yield: US 1.65% Australia 1.03% Germany -0.36%
- 10-year US/Australia yield gap: 62 basis points
Virus Scare Worldwide
Chanticleer: No reason for virus panic – yet: Predicting the economic impact of the coronavirus is made all the more difficult by the impact of quarantines and other interventions. That has not stopped speculation about what will happen next, writes Chanticleer.
Latest WHO Situation Report
- Global confirmed cases: 24,554 (3925 new)
- China: confirmed cases 24,363 (3983 new); severe 3219; deaths 491
- Outside of China: confirmed cases 191 (32 new); 24 countries (1 new-Belgium); deaths 1
China’s Changjiang Daily newspaper reported on Tuesday that a team of researchers led by Zhejiang University Professor Li Lanjuan had found that drugs Abidol and Darunavir can inhibit the virus in vitro cell experiments.
Separately, Sky News reported that a British scientist has made a significant breakthrough in the race for a vaccine by reducing part of the normal development time from two to three years to only 14 days.
Baltic Index Falls
- The Baltic Exchange’s main sea freight index dropped on Wednesday, with the capesize segment slumping to an all-time low due to reduced demand for ships and muted activity in China amid a coronavirus outbreak.
- The Baltic index, which tracks rates for capesize, panamax and supramax vessels to ferry dry bulk commodities, dropped 23 points, or 5.0%, to 430.
- The capesize index declined 50 points to a negative 183, down for the 39th straight session.
Fitch Solutions Forecast
Despite the downward pressure on iron ore prices due to mounting concerns over the epidemic’s economic impact, Fitch Solutions raised its 2020 iron ore price forecast to an average $US85 a tonne from $US80.
“While we expect the (iron ore) supply issues of 2019 to be largely resolved, strong demand from the steel industry in China as the government continues to stimulate the domestic construction industry in the face of a slowing economy, and more recently, the 2019 (virus) epidemic, will prevent prices from collapsing,” Fitch Solutions said.
Australian sharemarket
The Australian sharemarket rose for a second consecutive session on Wednesday, extending its rally from Monday’s sell-off as investors bet the economic damage of the coronavirus would be offset by stimulus measures from China.
The S&P/ASX 200 Index advanced 27.4 points, or 0.4 per cent, to 6976.1, recording two consecutive sessions in the green for the first time in more than two weeks.
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Source: Financial Review
