Morning report

Bernie Bows Out, US Markets Up

Global markets were mixed on Wednesday, with the US surging even higher while Europe, the UK and most of Asia seemed to struggle. Eurozone finance ministers were unable to agree on a rescue package.

US investors react positively to companies furloughing workers, and to Bernie bowing out

US stocks rose on Wednesday on hopes that the virus is close to its peak. Health insurers were boosted when Bernie Sanders suspended his campaign for the Democratic nomination, leaving the more moderate Joe Biden as the presumptive candidate. The S&P 500 (+3.0%), Down Jones (+3.0%) and Nasdaq Composite (+2.3%) were all in the green. UnitedHealth Group (+6.4%), Anthem (+8.8%) and Cigna (+5.3%) all jumped, as the healthcare index led the S&P index higher. Tesla (-0.2%) on Tuesday became the latest US company to furlough staff and cut salaries during a shut down of its US production facilities. Spirit Aerosystems (+11.5%) is taking a series of measures to cut costs after Boeing (+4.4%) suspended all deliveries to its Washington state and South Carolina facilities until further notice. The company laid off 2,800 workers. Caterpillar said that it had decided to maintain its quarterly dividend of $1.03 a share, ultimately lifting the shares up +2.3%. Nordstrom shares were up +6.2% after it said it had temporarily closed all physical stores and furloughed most of the workers.

Europe flat while UK retreats

The Stoxx 600 finished flat on Wednesday, as a meeting of Eurozone finance ministers ended with no agreement on an economic rescue package in response to the pandemic, and grim forecasts for France and Germany. Sources said car maker Renault (-0.5%) might consider suspending its dividend.

Britain's FTSE 100 fell -0.5%. The rising death toll crushed hopes of the coronavirus crisis subsiding, and Boris Johnson remained in intensive care. Insurers Aviva (-4.9%), Direct Line (-7.9%), RSA (-5-.5%) and Hiscoux fell after cancelling their dividends. Miner Rio Tinto (-2.1%) said it would press ahead with its dividend. Tesco (-0.6%) fell as it forecast costs from the pandemic of up to £925m and warned it was unable to give a profit forecast for the current year.

Asian markets mostly in the red

Asian markets were mostly lower on worries about pandemic damage. The Hang Seng (-1.2%) and Shanghai Composite (-0.2%) fell, while the Nikkei 225 surged +2.1% higher.

The ASX 200 slid -0.9%, led by the banks after the financial industry regulator guided them to lower dividend payouts. Westpac (-5.3%), ANZ (-4.9%), NAB (-3.3%) and CBA (-3.3%) all ended lower.

The NZX 50 closed flat with Metlifecare plummeting -17.4% after a buyer sought to withdraw from a takeover deal.

Crude rose with gold and iron ore remaining flat

WTI crude rose +6.5% to US$26.20, gold remained flat at US$1648.19 and iron remained at US$81.90/MT.

NZ Headlines

Swedish investment firm EQT is attempting to terminate its $1.5 billion takeover of NZX-listed Metlifecare (MET), but the aged care provider's board isn't going down without a fight.

Tilt Renewables (TLT) is set to return $A260 million to its 8100 shareholders through a pro rata share buyback scheme following December's successful wind farm sale.

A 60% increase in the usage of Vodafone's network since the COVID-19 pandemic has spurred investment in upgrading its network infrastructure to provide a stable connection for customers.

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This morning summary has been provided by Forsyth Barr Ltd and is for general information purposes only - your financial situation or goals have not been taken into account. If you would like more information or advice that is specific to you, talk to your Authorised Financial Adviser.