- ASX futures are down 366 points, or 6.9 per cent.
- Shares in Europe and Wall Street collapsed in overnight trade.
NAB pulls capital notes 4 offer
National Australia Bank has blamed market volatility for the withdrawal of its capital notes 4 convertible notes offer.
“NAB recognises that market conditions have changed substantially since the Offer was launched and that the ongoing market volatility would be likely to impact on the trading value of the NAB Capital Notes 4,” the banks said.
“NAB considers that the withdrawal of the Offer is in the best interests of relevant stakeholders, including the large number of retail investors who had expressed interest in participating in the Offer.”
The bank said it remains well capitalised despite the offer withdrawal with pro forma tier one group capital at 12.6 per cent as at December 31 2019. Pro forma common equity tier one capital stood at 10.6 per cent.
For anyone wanting to get all the latest on what’s happening with coronavirus outside of the markets, you can follow all the action on The Australian Financial Review’s coronavirus news blog here.
Crude prices dip as Trump travel ban adds to demand woes
Oil markets have come under sustained pressure after the European travel ban announced by the US yesterday magnified existing demand concerns and the Riyadh–Moscow price war.
Since midday yesterday AEDT when the US President Donald Trump delivered a speech on the COVID-19 crisis, crude prices have fallen by close to another 10 per cent.
Brent crude is now down to about $US33.50 a barrel. It’s value has now been more than halved since January—at the start of the year it was fetching $US70.
Similarly, WTI is currently near $US31.30 a barrel compared to near $US65 at the turn of the year.
Australian dollar hit hard by strong US dollar demand
The Australian dollar has tumbled nearly 4 per cent in the last 24 hours with strong US dollar demand pushing most other major currencies to the wayside.
The Aussie was last buying US62.33¢. Just a day ago it was buying US64.89¢.
The greenback has become a new safe haven for investors, at least for the time being, with the Japanese yen taking a hit.
“The euro and the British pound have also traded wide ranges in the order of 3-4 big figures, and both succumbing to US dollar strength,” said NAB senior FX strategist Rodrigo Catril.
“We are certainly in the midst of a severe global downturn and more drastic policy action from both central banks and governments should be expected. As my BNZ colleague Jason Wong noted in his daily, these volatile times are not likely to go away in a hurry.”
The Australian dollar still has plenty of room to fall.
“The Australian government’s fiscal easing announced yesterday was a welcome development, but largely ignored by the market,” said Mr Catril.
“Risk and growth sensitive currencies such as the Aussie and New Zealand dollar have room to trade lower and for the Aussie a move sub 60¢ can no longer be ruled out.”
France closes schools, UK says peak is a long way away
Here are some of the overnight headlines:
- French President Emmanuel Macron will speak with US President Donald Trump on Friday to discuss the G7’s coronavirus measures
- France will close schools and universities from Monday, Macron says
- The US Major League Baseball will suspend all operations, including spring training
- The United Kingdom expects the peak of coronavirus outbreak in 10-14 weeks
- The US National Hockey League will suspend its regular season
- Italy’s coronavirus deaths top 1,000 while the number of cases jump to 15,113
- Ireland has closed its schools and says mass gatherings should be cancelled
- Chilean airline LATAM and Brazilian airline Azul have suspended 2020 guidance on coronavirus
- Germany says it’s ready to ditch its balanced budget in order to combat coronavirus
- Princess Cruises will pause its global ship operations for 60 days
- Canadian Prime Minister Justin Trudeau will self-isolate with his wife after she began to show mild symptoms of illness late on Wednesday after returning from the UK.
- Norwegian Air will lay off 50 per cent of staff amid additional flight cuts
- New York Governor Andrew Cuomo says there are to be no gatherings of more than 500 people in the state
- Disney to close Disneyland Park & Disney California Adventure
- New York City mayor Bill De Blasio has declared a state of emergency in the city.
Auckland Airport has cut its earnings guidance for the 2020 financial year, with significant market uncertainty due to the outbreak of the coronavirus weighing on the airport’s bottom line.
On Friday, the airport said it had revised its underlying earnings guidance for the year to be between $210 million and $235 million.
The airport previously said it had been expecting underlying earnings for the full year to be between $260 million and $270 million.
“Since the announcement of our interim results on 20 February 2020 the COVID-19 outbreak has continued to evolve quickly with cases spreading rapidly across the globe,” said chief executive Adrian Littlewood.
“We will be monitoring developments over the remainder of the 2020 financial year, including the introduction of any new border restrictions, and we will continue to update guidance if there are further significant changes.
“It’s a very dynamic situation and we are now seeing a significant reduction in flights and in the number of passengers coming through our terminals as governments introduce unprecedented border restrictions and people choose not to travel.
“We’ve seen an immediate impact on business travel, and we are now anticipating a rapid downturn in leisure travel in the coming months, as cancellations flow through and demand for bookings continues to soften.”
The company said total passenger numbers had fallen 3.4 per cent in January, 8.6 per cent in February and initial data for the first 10 days of March showed an 18 per cent decline on the year prior.
ECB offers $212b stimulus to offset virus impact
The European Central Bank is deploying new stimulus measures to cushion the economic pain inflicted by the virus outbreak.
The central bank decided Thursday to buy up €120 billion ($212 billion) more in bonds.
It is also providing additional cheap, long-term loans to banks to make sure they have the liquidity needed. And the ECB will temporarily ease some of its capital requirements for banks to help them keep lending.
The bank did not cut interest rates as many analysts had expected. Rates are already low and economists have said deeper cuts might not help much.
It’s all aimed at helping businesses get the financing they need and stimulating activity to offset the downturn from all the closings and restrictions due to the virus outbreak.
Some economists say the 19 countries that use the currency could be facing a recession this year.
The decision looms as the eurozone is forecast to slide into recession and financial markets keep falling over concerns about the virus outbreak’s hit to the economy. Concerns deepened after the US decided to halt travel from 26 European countries.
Markets collapse as Trump misses mark
Australian shares are set to plunge anew amid another violent sell-off in global equities even with the US central bank stepping up with a massive liquidity boost.
Trading was halted for 15 minutes shortly after the open in New York after the S&P 500 fell 7 per cent; the second time this circuit breaker was triggered this week. In late trade, all three major US benchmarks were at least 7.9 per cent lower.
The local currency was down 2.6 per cent to US63.13¢ at 6.17am AEDT, after earlier falling more than 3 per cent to as low as US62.66¢.
The losses were triggered by a lack of confidence in President Donald Trump’s effort to contain COVID-19, as per his Oval Office speech, and his seemingly single-minded focus on his 2020 reelection campaign rather than a plan to bolster the economy.
In addition, Mr Trump and Congressional leaders – both Republican and Democrat – remained at odds on what should be part of an immediate stimulus plan.
In contrast to Mr Trump, UK Prime Minister Boris Johnson offered a very sobering take on what lies ahead: “I must level with the British public: many more families are going to lose loved ones before their time.” That came a day after the UK detailed $58 billion in spending and investment plans.
It was a sea of red across Europe and on Wall Street, which the US central bank barely dented with its promise of $US1.5 trillion in liquidity.
European markets ended near their session lows; the Federal Reserve Bank of New York statement came after their closing bells. The FTSE 100 cratered 10.9 per cent. Both the French and German main benchmarks shed more than 12 per cent.
Aussie dollar plummets; global markets collapse
Here are the overnight market highlights:
- AUD -2.3% to 63.37 US cents (Overnight low 62.66)
- On Wall St near 2.45pm: Dow -7.9% S&P 500 -8.2% Nasdaq -7.3%
- In New York: BHP -13% Rio -9.7% Atlassian -3.5%
- Apple -7.4% Amazon -6.7% Netflix -9.6% Microsoft -6.4%
- In Europe: Stoxx 50 -12.4% FTSE -10.9% CAC -12.3% DAX -12.2%
- Spot gold -2.6% to $US1592.55/oz at 1.27pm New York
- Brent crude -7% to $US33.28 a barrel
- Iron ore +0.8% to $US90.75 a tonne
- Dalian iron ore +0.2% to 663 yuan
- LME aluminium -1.1% to $US1656 a tonne
- LME copper -1.6% to $US5440 a tonne
- 10-year yields: US 0.71% Australia 0.76% Germany -0.74%
Good morning and welcome to Markets Live for Friday.
This blog is not intended as investment advice.