Markets Continue To Gyrate Amid Virus Concerns

By Glenn Dyer | More Articles by Glenn Dyer

It will be a stronger start to trading on the ASX on Thursday, even though the futures market ended its session in the red to the tune of around 18 points. That is at least 90% lower than the fall on Tuesday.

But there was a small, but nasty fall right at the close as the loss on the Dow more than doubled in a matter of minutes.

So there is every chance the local market will have a better day than it has had so far this week with big losses (around 6% of its value or nearly $130 billion).

Wall Street had small losses for the Dow and S&P 500 and investors found enough cheer to lift the Nasdaq into the green.

The Dow lost 123.7 points or 0.4%, the S&P 500 shed 11.8 points or 0.38% and Nasdaq was up 0.17% or 15 points.

Near the end, Microsoft, one of the market’s trillion-dollar glamour stocks downgraded its current march quarter guidance because of the perceived impact of the COVID-19 virus.

It joined Apple in issuing a revenue and profit warning linked to the virus.

European markets traded in the green for the first time this week and Wall Street started confidently but sagged after news of new cases from South America, Greece, and Italy, as well as an updated figure for the number of cases in the US – 59.

Gold and oil fell (the latter to a 13 month low).

The Australian dollar fell to new 11 year lows, dipping to 65.52 US cents before trading just above that at 65.57 US cents in early Asian dealings.

The yield on US 10 year Treasury bonds dipped to a new all-time low of 1.302% and was trading just above that in early Asian dealings at just over 1.31%.

Gold prices ended lower on Wednesday, building on the previous session’s retreat, even as worries remain over the spread of coronavirus outside of China.

More cases of the virus were reported outside China than from the country where it started. Reports of infections emerged from South America (Brazil), new countries in Europe such as Switzerland, more deaths and infections in Italy, Greece reported its first case and President Donald Trump blamed the American cable TV news (CNN and MSNBC, naturally) for making the disease look worse than it is.

The 59 reported cases in the US are up from a handful last week.

Trump has been increasingly alarmed by the drop in U.S. stock markets, which he considers a barometer of the health of the American economy and sees as key to his re-election.

Analysts say it is starting to become clear to blase markets that there is a very real potential for a slowdown in global economic growth. That is why gold, in particular, has sold off this week instead of rising as a key safe-haven investment.

China, which remains the hardest hit by COVID-19, is the world’s biggest buyer and consumer of gold. Gold sales have reportedly come to a halt in wide areas of the country.

Comex gold for April delivery fell $US6.90, or 0.4%, to settle at $US1,643.10 an ounce. The metal jumped to a seven-year high on Monday as worries about COVID-19 sparked a global equity rout, prompting investors to find traditional havens.

Comex March silver shed 35.7 cents, or 2%, to end at $US17.834 an ounce while the May contract, which is now the most active, lost 1.9% to settle at $US17.914.

Copper, a key commodity indicator for the health of the Chinese economy also lost ground on Comex. March copper fell 0.2% to $US2.5725 a pound while the most-active May contract shed 0.3% to $US2.5735.

Oil futures fell on Wednesday, with West Texas Intermediate crude, the US benchmark settling at its lowest in more than a year as global energy demand worries fed by fears about the spread of COVID-19, sent prices down for a fourth consecutive session.

April West Texas Intermediate oil fell $US1.17, or 2.3%, to settle at $US48.73 barrel in New York. That was the lowest front-month contract finish since January 2019, according to FactSet data.

April Brent crude futures lost $US1.52, or 2.8%, to $US53.43 a barrel on Europe.

According to Marketwatch.com:

There are now 81,212 confirmed cases of COVID-19 and have been at least 2,770 deaths, according to a tally of cases published by the Johns Hopkins Whiting School of Engineering’s Centers for Systems Science and Engineering.

The increase in cases overnight has primarily been driven by new cases in Iran (now at 139 cases and 19 deaths), Italy (401 cases and 12 deaths), Japan (178 cases and two deaths), and South Korea (1,261 cases and 12 deaths).

In the US, of the known 59 cases, 45 are from people who were repatriated from Wuhan, China, the epicenter of the outbreak, and the Diamond Princess cruise ship, docked in a port at Yokohama, Japan.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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