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Modest gains on Wall Street point to a cautious start to Australian trade after a leading Chinese medical adviser said the coronavirus epidemic should peak this month.
ASX SPI200 futures advanced nine points or 0.1 per cent to 6999 ahead of half-year profit updates from index heavyweights Commonwealth Bank, IAG and CSL.
The major US indices hit records early in the session, before paring gains as investors digested testimony from Federal Reserve Chair Jerome Powell, soft economic data and the latest on the virus outbreak. The S&P 500 ended sixpoints or 0.17 per cent ahead at 3,358. The Nasdaq put on 11 points or 0.11 per cent. The Dow closed unchanged.
The session began strongly after the Chinese government’s senior medical adviser told Reuters the epidemic should peak by the middle or end of this month and be over by April. Zhong Nanshan, who was praised for his work on the SARS outbreak in 2002-2003, based his forecast on mathematical modelling and government efforts to contain the virus. The death toll climbed above 1,000 yesterday, with 42,638 infections confirmed on the Chinese mainland. However, the number of new cases declined to the lowest level since late January.
Fed Chair Powell told the House Financial Services Committee the central bank was monitoring the spread of the virus, but it was too early to say if it would affect the US economy. He said the economy was “resilient” to global headwinds. His written report to the committee said the economy was growing at a “moderate” pace.
Clothing company Under Armour plunged 18 per cent after warning of a $US50-$60 million hit to sales from the outbreak. Australian hearing device maker Cochlear fell yesterday after revealing that delays to surgeries in China would cost the company up to $30 million in lost profits.
The recent run of strong US economic data hit a bump with a soft report on job openings. Openings hit a two-year low in December following a second month of sharp declines. “This collapse in the need for labour on the part of companies is not a positive development,” Chris Rupkey, chief economist at MUFG in the US, told Reuters.
The ASX 200 hit a three-week high yesterday as part of a global push back towards recover levels. The benchmark index climbed 43 points or 0.6 per cent to draw within 1.3 per cent of its peak before the virus triggered a sell-off.
Resource stocks underperformed yesterday, but should benefit from a sharp rise in iron ore. BHP’s US-listed stock put on 0.87 per cent and its UK-listed stock 0.93 per cent. Rio Tinto added 0.5 per cent in the US and 0.73 per cent in the UK. The spot price for iron ore landed in China jumped $3.85 or 4.7 per cent to $US85.55 a dry ton.
Oil rebounded from its weakest level in more than a year. Brent crude settled 74 cents or 1.4 per cent higher at $US54.01 a barrel.
Gold declined for the first time in five sessions following reports that the pace of the coronavirus was slowing. Gold for April delivery weakened $9.40 or 0.6 per cent to settle at $US1,570.10 an ounce.
Benchmark copper on the London Metal Exchange climbed 1.4 per cent from $US5,695 to $US5,729.25 a metric tonne. Aluminium gained 2.1 per cent, zinc 0.7 per cent, nickel 1.8 per cent, lead 3.3 per cent and tin 0.9 per cent.
The dollar climbed 0.4 per cent to 67.13 US cents.
The domestic interim earnings season is in full stride now, with updates today due from CBA, IAG, CSL, Computershare, Amcor, Evolution Mining, Downer EDI, Tassal Group, Carsales.com and James Hardie. February consumer sentiment figures are also due. Fed Chair Powell is due to continued his testimony in the US tonight. Also due: crude oil inventories.
