Overnight: Europe Down, US Pauses

Sharemarkets in Europe and Asia retreated last night as Wall Street closed little changed.

World Overnight
SPI Overnight (Mar) 7051.00 + 21.00 0.30%
S&P ASX 200 7088.00 – 44.70 – 0.63%
S&P500 3325.54 + 3.79 0.11%
Nasdaq Comp 9402.48 + 18.71 0.20%
DJIA 29160.09 – 26.18 – 0.09%
S&P500 VIX 12.98 + 0.07 0.54%
US 10-year yield 1.74 – 0.03 – 1.64%
USD Index 97.68 + 0.15 0.15%
FTSE100 7507.67 – 64.25 – 0.85%
DAX30 13388.42 – 127.33 – 0.94%

Greg Peel will resume writing the Overnight Report after Australia Day (next week). In the meantime, Jessica Amir from Bell Direct is providing a snapshot of insights and developments from overseas markets overnight.

By Jessica Amir, Bell Direct

The Australian share market is eyeing a positive day of trade after the World Health Organisation (WHO) suppressed some of the fears around the globe about the coronavirus.

The WHO said, it was “too early to consider this event is a public health emergency of international concern.” A bit of a sigh of relief for investors, after the strain of virus has killed 18 people in China and infected over 650.

In the US, stocks recovered from most of their earlier losses on the back of the WHO’s remarks, with airline stocks, anti-virus and vaccine companies seeing some healthy gains. American Airlines shares rose 5.4%, United Airlines closed 1.9% higher, while Inovio Pharmaceuticals surged 11.6%, and Gilead Sciences added 0.8%. We also saw the tech heavy Nasdaq close at a new record high.

Over in Europe, the ECB held its rates steady and launched a review of its monetary policy, as expected. The ECB President, Christine Lagarde didn’t provide any further detail when the market wanted more, which is why EU shares fell further from their record all-time highs.

In terms of local economic news

Yesterday we learnt the unemployment unexpectedly fell to 5.1% in December, which is closer to the RBA’s target of 4.5%. It was good news but caused investors to take local sharemarket profits off the table, with some traders thinking the RBA is now less likely to cut rates next month.

Today, all eyes will be on the manufacturing and services sector data for January.

To Markets

The Aussie share market futures are suggesting a 0.21%/15 point gain. Yesterday the benchmark index, ASX200 fell -0.63% or 45 points, closing at 7,088 points. That’s our second best close on record! Year to date, the market is up 6.76%.

On Wall Street, after their choppy session the Dow Jones closed virtually flat for the second day (0.09%/26 points lower), while the broader S&P500 rose 0.11% and Nasdaq added 0.20%.

European markets closed in the red. The Stoxx 600 lost -0.71%, UK’s FTSE lost -0.85%, the French CAC fell -0.65%, while the German DAX lost -0.94%.

In Asia, stocks in China fell the most, seeing their biggest one-day loss since last May last year, as the deadly virus death toll rose, while the city of Wuhan where the virus spread rapidly, remains in lockdown. China’s Shanghai Comp stumbled -2.75% lower, Hong Kong’s Heng Seng followed, losing -1.52%, while Japan’s Nikkei lost -1%, along with Korea’s Kospi.

Gold firmed US$5.00 higher to US$1,562 an ounce.

Oil continued to fall, losing –1.95% to US$55.65 a barrel, that’s an 11-week low, with China’s virus outbreak causing demand concerns.

Iron ore is -0.04% lower at US$94.80 a tonne.

Australian dollar trades at 68.43 US cents.

Spot Metals,Minerals & Energy Futures
Gold (oz) 1561.70 + 3.80 0.24%
Silver (oz) 17.79 – 0.01 – 0.06%
Copper (lb) 2.71 – 0.06 – 2.00%
Aluminium (lb) 0.81 – 0.01 – 1.07%
Lead (lb) 0.89 – 0.01 – 1.11%
Nickel (lb) 6.05 – 0.08 – 1.25%
Zinc (lb) 1.08 – 0.02 – 1.75%
West Texas Crude 55.50 – 1.20 – 2.12%
Brent Crude 61.94 – 1.22 – 1.93%
Iron Ore (t) futures 92.05 – 3.35 – 3.51%

The Australian share market over the past thirty days…

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
AGL AGL ENERGY Downgrade to Sell from Neutral UBS
APE AP EAGERS Downgrade to Hold from Add Morgans
CLW CHARTER HALL LONG WALE REIT Upgrade to Neutral from Underperform Macquarie
CQE CHARTER HALL SOC INFRA REIT Upgrade to Accumulate from Hold Ord Minnett
CQR CHARTER HALL RETAIL Upgrade to Outperform from Underperform Macquarie
DMP DOMINO’S PIZZA Downgrade to Sell from Neutral Citi
DXS DEXUS PROPERTY Upgrade to Outperform from Underperform Macquarie
Upgrade to Accumulate from Hold Ord Minnett
Upgrade to Buy from Neutral UBS
FLT FLIGHT CENTRE Downgrade to Neutral from Outperform Credit Suisse
FMG FORTESCUE Upgrade to Neutral from Underperform Credit Suisse
HUB HUB24 Upgrade to Add from Hold Morgans
IFN INFIGEN ENERGY Upgrade to Add from Hold Morgans
MGR MIRVAC Upgrade to Hold from Lighten Ord Minnett
Upgrade to Neutral from Sell UBS
MTS METCASH Upgrade to Neutral from Underperform Macquarie
NHF NIB HOLDINGS Upgrade to Neutral from Sell UBS
PPC PEET & COMPANY Downgrade to Neutral from Outperform Macquarie
QBE QBE INSURANCE Upgrade to Buy from Neutral Citi
REH REECE AUSTRALIA Downgrade to Hold from Add Morgans
RRL REGIS RESOURCES Downgrade to Underperform from Neutral Macquarie
SCG SCENTRE GROUP Downgrade to Sell from Neutral UBS
SCP SHOPPING CENTRES AUS Upgrade to Neutral from Underperform Macquarie
SGP STOCKLAND Downgrade to Lighten from Hold Ord Minnett
SUN SUNCORP Downgrade to Neutral from Buy Citi
SYD SYDNEY AIRPORT Downgrade to Neutral from Outperform Macquarie
TCL TRANSURBAN GROUP Downgrade to Accumulate from Buy Ord Minnett
WOW WOOLWORTHS Upgrade to Outperform from Neutral Macquarie
Greg Peel

About Greg Peel

Greg Peel joined Macquarie Bank in 1986 and acquired trading experience in equities, currency, fixed income and commodities derivatives, ultimately being appointed director of equity derivatives trading. He later published In With The Smart Money (a plain English guide to the mysterious world of financial markets and derivatives) and acted as a consultant to boutique investment funds. In 2004 Greg joined FNArena as a contributing writer. He is now a director and principal of the company. Greg compliments the journalistic background of the FNArena team with lengthy experience as a financial markets proprietary trader.

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