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The coronavirus outbreak sent a shiver through world markets overnight, setting up a subdued start to Australian trade.
SPI200 index futures eased two points or less than 0.1 per cent to 7006 as Asian, European and US markets retreated.
Share markets perched at record highs were ripe for profit-taking after an extraordinary start to 2020. The viral outbreak triggered a sell-off in Asia yesterday that continued through Europe at a more measured pace into the US.
The coronavirus has infected more than 200 people and killed at least six in China. Reports of the first identified case in the US sent the Dow down more than 200 points before a partial rebound. The blue-chip index finished the session 152 points or 0.52 per cent in the red. The broader S&P 500 shed nine points or 0.27 per cent. The Nasdaq fared best with a loss of 18 points or 0.19 per cent.
Airlines, hotels and casinos bore the brunt of the selling amid fears of the potential impact on tourism and travel after a visitor from China was diagnosed with the virus upon arrival at Seattle’s airport. United Airlines fell 4.36 per cent, Delta 2.72 per cent, Wynn Resorts 6.14 per cent and Hyatt Hotels 2.65 per cent. Steel companies exposed to Chinese demand also declined.
The latest outbreak has drawn comparisons with the SARS crisis of 2003, which infected more than 8,000 people and killed 774. The new virus was first detected in December, but Asian markets only reached tipping point yesterday following reports of cases in Thailand, Japan and South Korea. China’s Shanghai Composite dived 1.41 per cent, Hong Kong’s Hang Seng 2.81 per cent and Japan’s Nikkei 0.91 per cent. Here, the ASX 200 finished 13 points or 0.2 per cent lower, ending a five-session winning run.
Falls in Europe were more restrained: the pan-European Stoxx 600 eased 0.14 per cent, Britain’s FTSE 100 0.53 per cent and France’s CAC 40 0.54 per cent. The DAX in Germany gained 0.05 per cent.
Also weighing on market sentiment was a downbeat economic outlook from the International Monetary Fund. The IMF cut its growth forecasts for this year and next year, citing the lingering effects of the US-China trade war.
A ‘flight to safety’ overnight boosted the greenback, sending the Australiandollar lower. The Aussie slipped four-tenths of a cent to 68.44 US cents.
The nation’s largest miners were caught up in overseas sell-offs. BHP’s US-listed stock declined 1.59 per cent and its UK-listed stock 1.36 per cent. Rio Tinto shed 1.19 per cent in the US and 1.46 per cent in the UK. The spot price for iron ore landed in China eased 25 cents or 0.3 per cent to $US95.60 a dry ton.
The risk-off mood dragged oil lower despite supply disruptions in Libya and Iraq. Brent crude settled 61 cents or 0.9 per cent weaker at $US64.59 a barrel. Oil rallied yesterday after armed forces blockaded Libya’s largest oilfield and Iraqi security guards went on strike.
Copper slumped to its weakest level in two weeks following a sharp increase in inventories at London Metal Exchange-registered warehouses. Benchmark copper fell 1.6 per cent, its heaviest one-day loss since October. Aluminium gained 0.7 per cent and zinc 0.4 per cent. Nickel lost 2.6 per cent and tin 1.5 per cent. Lead closed flat.
Gold drifted lower amid concerns about the effects of the viral outbreak on Chinese demand during the Lunar New year holiday. Gold for February delivery settled $2.40 or 0.2 per cent weaker at $US1,557.90 an ounce.
Westpac’s January consumer sentiment report at 10.30 am EST is the highlight on the domestic economic calendar today. Wall Street has housing data on tap tonight, as well as quarterly reports from Ford, United Technologies and Texas Instruments.
