A market dogged by fears of the economic impact of China’s virus outbreak looks set to edge higher at the open following a tentative rebound in the US.
ASX SPI200 index futures rose 21 points or 0.3 per cent to 7051 as Wall Street turned positive late in the session. Market sentiment was boosted by a World Health Organization (WHO) decision not to declare a global health emergency as China quarantined another five cities in the Hubei province after the death toll from the coronavirus reached 18.
Concerns about a potential blow to Chinese growth sent Asian markets sharply lower yesterday. China’s Shanghai Composite slumped 2.75 per cent, its heaviest one-day loss since last May. Japan’s benchmark shed 0.98 per cent and the Hang Seng in Hong Kong 1.52 per cent. Here, the ASX 200 dropped 45 points or 0.6 per cent after unexpectedly strong December jobs data undercut the case for a rate cut next month.
Market jitters continued in Europe, where the Stoxx 600 lost 0.71 per cent. US stocks opened in the red, but improved as the session went on. The S&P 500 turned an opening deficit of around 16 points into a final gain of 3.8 points or 0.11 per cent. The Nasdaq rose 19 points or 0.2 per cent. The Dow trimmed a 200-point loss to 26 points or 0.09 per cent by the close.
US stocks recovered after WHO said it was too early to declare an international emergency. Six hundred cases have been declared so far, with the vast majority centred in China. Most of the dead were reported to be elderly and had pre-existing conditions.
The Dow was hamstrung by soft earnings reports from Travelers and Procter & Gamble. Shares in insurer Travelers gave up 5.11 per cent after writing fewer premiums than expected. Health and beauty giant Procter & Gamble eased 0.45 per cent following a revenue miss.
Mining stocks and commodity prices exposed to Chinese demand bore the brunt of the selling. Oil, industrial metals and iron ore took significant hits.
Rio Tinto lost 2.6 per cent in the US and 3.86 per cent in the UK. BHP’s US-listed stock shed 1.22 per cent and its UK-listed stock 2.67 per cent. The spot price for iron ore landed in China slid $3.35 or 3.5 per cent to $US92.05 a dry ton.
Oil skidded to its lowest level since early December. Brent crude settled $1.17 or 1.9 per cent weaker at $US62.04 a barrel. The international benchmark has fallen for three straight sessions despite supply disruptions in Libya.
Benchmark copper on the London Metal Exchange declined 2 per cent to $US5,987 a tonne, a six-week low. The “metal with the degree in economics” has lost 4.5 per cent so far this week. Aluminium lost 0.9 per cent, nickel 2.1 per cent, lead 1 per cent, zinc 2.2 per cent and tin 2.3 per cent.
Gold climbed to a two-and-a-half-week high as investors sought havens from volatility in risk assets. Gold for February delivery settled $8.70 or 0.6 per cent higher at $US1,565.40 an ounce.
The dollar held broadly steady at 68.42 US cents.
Today’s economic calendar is dominated by early takes on manufacturing and services activity this month – so-called “flash” PMIs. Reports are due here at 9 am EST, followed later in the cycle by Japan, Europe and the US.