Australian shares were poised to open higher on reports that efforts to find a cure for the coronavirus were successful. The WHO dismissed the reports.
ASX futures were up 57 points or 0.8% to 6965 near 5am AEDT. The local currency edged up 0.1%.
Shares closed higher across Europe and were higher in early afternoon trade in New York. In contrast, some of the air came out of Telsa’s stock; it was down 15.2% after it said car deliveries in China would be delayed.
A Chinese TV report said researchers at Zhejiang University had found an effective drug for the virus, while Britain’s Sky News said researchers had made a “significant breakthrough” in developing a vaccine.
The World Health Organisation though played down the reports.
“There are no proven effective therapeutics for novel coronavirus,” Dr Mike Ryan, executive director of WHO emergencies programme, told a news conference in Geneva.
Hundreds of experts will meet in Geneva next week to set research and development priorities for coronavirus drugs, diagnostics and vaccines to combat the outbreak.
WHO director-general Tedros Adhanom Ghebreyesus said a multinational WHO-led team would go to China very soon to work with Chinese authorities in tackling the outbreak. He gave no details.
The past 24 hours had seen the most cases in a single day since the outbreak started.
It wasn’t just equities which rallied overnight. Three-month copper on the London Metal Exchange hit $US5769 a tonne, its highest since January 27, before paring gains. It closed 1.9 per cent firmer at $US5722 in final open-outcry trading.
Local: Trade balance and retail sales for December, NAB business confidence fourth quarter
Overseas data: Germany factory orders December
ASX futures up 57 points or 0.8% to 6965 near 5am AEDT
- AUD +0.1% to 67.45 US cents
- On Wall St near 1.10pm: Dow +1.2% S&P 500 +0.9% Nasdaq +0.2%
- In New York: BHP +1.3% Rio +1.5% Atlassian -4% Tesla -15.2%
- In Europe: Stoxx 50 +1.2% FTSE +0.6% CAC +0.9% DAX +1.5%
- Nikkei 225 futures +1.2%
- Spot gold +0.3% to $US1558.07 /oz at 12.26pm NYC
- Brent crude +4% to $US56.10 a barrel
- US oil +4% to $US51.59 a barrel
- Iron ore -2.9% to $US81.31 a tonne
- Dalian iron ore -1.5% to 578 yuan
- LME aluminium +1.8% to $US1717 a tonne
- LME copper +1.9% to $US5722 a tonne
- 2-year yield: US 1.44% Australia 0.74%
- 5-year yield: US 1.46% Australia 0.74%
- 10-year yield: US 1.65% Australia 1.03% Germany -0.36%
- 10-year US/Australia yield gap: 62 basis points
From today’s Financial Review
Chanticleer: No reason for virus panic – yet: Predicting the economic impact of the coronavirus is made all the more difficult by the impact of quarantines and other interventions. That has not stopped speculation about what will happen next, writes Chanticleer.
How not to annoy RBA boss Philip Lowe: If you happen to strike up a conversation with RBA boss Philip Lowe, don’t annoy him by saying that interest rate cuts aren’t working.
Woolworths sets up VC arm to target growth: The supermarket giant’s venture capital fund, W23, is eyeing investments in “disruptive innovation”.
Latest WHO Situation Report
Global confirmed cases: 24,554 (3925 new)
China: confirmed cases 24,363 (3983 new); severe 3219; deaths 491
Outside of China: confirmed cases 191 (32 new); 24 countries (1 new-Belgium); deaths 1
China’s Changjiang Daily newspaper reported on Tuesday that a team of researchers led by Zhejiang University Professor Li Lanjuan had found that drugs Abidol and Darunavir can inhibit the virus in vitro cell experiments.
Separately, Sky News reported that a British scientist has made a significant breakthrough in the race for a vaccine by reducing part of the normal development time from two to three years to only 14 days.
Trump flings red meat to Republicans as Democrats seethe: With Donald Trump set to be acquitted, the address will be remembered for a president refusing to shake the Speaker’s hand and her tearing up his speech.
The US trade deficit fell for the first time in six years in 2019 as the White House’s trade war with China curbed the import bill.
The report from the Commerce Department also showed the Trump administration’s “America First” agenda decreased the flow of goods last year, with exports posting their first decline since 2016.
With tensions in the 19-month US-China trade war easing, last year’s narrowing in the deficit is unlikely to be repeated.
“Since that entire drop came from the huge change in the China deficit, don’t expect further declines in the years to come,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
The trade deficit dropped 1.7% to $US616.8 billion last year, declining for the first time since 2013. That represented 2.9% of GDP, down from 3.0% in 2018.
The politically sensitive goods trade deficit with China plunged 17.6% to $US345.6 billion in 2019.
The Institute for Supply Management (ISM) said its non-manufacturing activity index increased to a reading of 55.5 last month from 54.9 in December.
The report came on the heels of a survey from the ISM on Monday showing manufacturing rebounded in January after contracting for five straight months.
Separately, the ADP National Employment Report showed private payrolls jumped by 291,000 jobs in January, the most since May 2015, after increasing by 199,000 in December. Private payrolls were likely flattered by unusually mild weather and a seasonal quirk, amid signs that overall job growth has slowed.
IHS Markit’s final euro zone composite Purchasing Managers’ Index (PMI), seen as a good indicator of economic health, rose to a five-month high of 51.3 in January from 50.9 the previous month.
UK shares got a shot in the arm on Wednesday after media reports that scientists had developed a drug against the China-linked coronavirus, though Imperial Brands and GlaxoSmithKline missed out after downbeat financial updates.
The FTSE 100 overturned earlier losses to rise 0.6% and the FTSE 250 added 0.4%. Both indexes ended higher for the third straight session.
Tobacco group Imperial Brands slid 6.6%, its worst day in more than four months, after it forecast lower profit because of a US regulatory ban on some flavours of cartridge-based vapour devices.
After noon, GSK skidded 4.2% on its worst day since early October, as cheap competition to its respiratory medicines led to fourth-quarter earnings missing analysts’ estimates.
Hong Kong stocks gained for the third straight session on Wednesday as investors bet on further policy support from Beijing to offset the economic impact of a rapidly spreading coronavirus.
At the close of trade, the Hang Seng index was up 0.4% at 26,786.74. The Hang Seng China Enterprises index rose 0.6%.
Hong Kong’s Cathay Pacific Airways has asked all its 27,000 employees to take three weeks of unpaid leave in coming months as it battles a fall in demand caused by the virus outbreak, the company said.
At the close, the Shanghai Composite index was up 1.3% at 2818.09, moving further away from a one-year bottom hit during Monday’s selloff. The blue-chip CSI300 index gained 1.1%.
The benchmark Nikkei average rose 1% to 23,319.56, while the broader Topix also added 1% to 1701.83.
All but one of the 33 sector subindexes on the Tokyo Stock Exchange were in positive territory, led by fish and forest , insurance and mining.
Sharp climbed 1.2% after the electronics company reported a 38.5% increase in third-quarter operating profit due to gains at its smart appliance division and cost-reduction efforts.
Panasonic continued its advance, with the shares ending the morning session up 4.4%, two days after the electronics conglomerate said its automotive battery venture with Tesla was in the black for the first time.
Morgan Stanley’s take on the RBA’s outlook for the local economy: “We believe its forecasts may be too optimistic and expect two 2020 cuts in response to disappointing labour market data (among other factors).”
TD Securites on the Aussie: “We think the AUD can extend its gains a bit further, particularly with the RBA as a tailwind. We see the most attractive risk/reward opportunities here on certain crosses, however. In line with this, we maintain our tactical GBPAUD short this week. At the same time, we believe AUDNZD is nearing the completion of a trough — especially after NZ’s tepid employment data overnight.”
U.S. authorities that accused six JPMorgan Chase & Co employees of rigging precious-metals futures are building a criminal case against the bank itself, Bloomberg Law reported, citing people familiar with the matter.
No formal accusations have been made against the bank, the report said. The probe raises the prospect of criminal charges and significant fines against the bank, the report added.
The Baltic Exchange’s main sea freight index dropped on Wednesday, with the capesize segment slumping to an all-time low due to reduced demand for ships and muted activity in China amid a coronavirus outbreak.
The Baltic index, which tracks rates for capesize, panamax and supramax vessels to ferry dry bulk commodities, dropped 23 points, or 5.0%, to 430.
The capesize index declined 50 points to a negative 183, down for the 39th straight session.
Despite the downward pressure on iron ore prices due to mounting concerns over the epidemic’s economic impact, Fitch Solutions raised its 2020 iron ore price forecast to an average $US85 a tonne from $US80.
“While we expect the (iron ore) supply issues of 2019 to be largely resolved, strong demand from the steel industry in China as the government continues to stimulate the domestic construction industry in the face of a slowing economy, and more recently, the 2019 (virus) epidemic, will prevent prices from collapsing,” Fitch Solutions said.
The Australian sharemarket rose for a second consecutive session on Wednesday, extending its rally from Monday’s sell-off as investors bet the economic damage of the coronavirus would be offset by stimulus measures from China.
The S&P/ASX 200 Index advanced 27.4 points, or 0.4 per cent, to 6976.1, recording two consecutive sessions in the green for the first time in more than two weeks.