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The ASX looks set to open little changed after negative developments in the coronavirus epidemic dragged on Wall Street.
SPI200 index futures ended the night session flat at 7029 as the major US stock indices closed lower.
A volatile 24 hours on financial markets saw the mood swing from tentative optimism that the virus epidemic was peaking to pessimism following a dramatic upsurge in deaths and reported cases. Chinese authorities yesterday reported that the death toll spiked on Wednesday by 242 to 1,367 during the deadliest day of the outbreak. Combined with a sharp increase in cases after authorities in Hubei changed the way they define infections, the news sent markets into reverse.
The Shanghai Composite fell 0.71 per cent. Here, the ASX 200 turned a bullish 58-point record run into a tepid final gain of 15 points or 0.2 per cent. The benchmark local index hit an all-time high before the reversal.
European stocks pared heavy early falls after the World Health Organization (WHO) said the number of infections was not rising dramatically. “This does not represent a significant change in the trajectory of the outbreak,” Mike, Ryan, WHO’s head of health emergencies, told the BBC. The pan-European Stoxx 600 reversed heavy initial falls to close 0.02 per cent below break-even.
US stocks closed firmly in the red, but well off session lows. The S&P 500 hit a new intraday record before ending 5.5 points or 0.16 per cent lower. The Nasdaq also broke new territory, then eased 14 points or 0.14 per cent. A poorly-received quarterly update from Cisco kept the Dow underwater all night, the blue-chip average finishing 128 points or 0.43 per cent down.
Wall Street nerves were soothed this week by signs the Federal Reserve stands ready to intervene if the economic fallout from the epidemic hits the US. Fed Chair Jerome Powell told Congress the central bank was monitoring the situation closely.
Defensive sectors outperformed overnight, with utilities and consumer staples rising while industrials, energy and materials declined. Cisco was the biggest drag on the Dow, falling 5.23 per cent after a weak outlook overshadowed beats on revenue and profits.
Australian mining giants BHP and Rio Tinto were dragged down by the general retreat from companies vulnerable to a downturn in Chinese demand. BHP’s US-listed stock shed 0.69 per cent and its UK-listed stock 0.7 per cent. Rio Tinto gave up 0.72 per cent in the US and 1.04 per cent in the UK. The declines came a modest uptick in the spot price for iron ore landed in China by 20 cents or 0.2 per cent to $US88.20 a dry ton.
Commodity traders proved more resistant to the latest virus headlines than stock traders. Oil rose for a third session amid speculation that Russia will cave in to OPEC demands for further production cuts. Brent crude settled 55 cents or 1per cent higher at $US56.34 a barrel.
Industrial metals extended their recovery from recent setbacks amid speculation about the virus’s disruptive effect on Chinese production. Benchmark copper on the London Metal Exchange climbed 0.5 per cent to $US5,790 a tonne. Aluminium gained 0.6 per cent, nickel 1.5 per cent, lead 2.1 per cent, zinc 1.3 per cent and tin 0.6 per cent.
Gold continued to attract a bid as a hedge against the virus crisis. Gold for April delivery settled $7.20 or 0.5 per cent at $US1,578.80 an ounce.
The dollar retreated 0.27 per cent to 67.19 US cents.
The flood of domestic company profit reports eases temporarily today before resuming next week. Cannabis investment group MMJ Holdings is due to release half-year earnings today. January retail sales are tonight’s big-ticket economic report on Wall Street. Also due: industrial production, preliminary consumer sentiment, business inventories and import prices.
