Morning report

Coronavirus Grips Investors

Global markets were broadly in the red on Tuesday as increasingly concerning news surrounding the current coronavirus outbreak in China weighed on investors’ minds. After returning from a long weekend the US brought its recent market rally to a stop, while Europe and the UK extended the prior day’s losses and Asian markets also sank.

US stocks edged lower over coronavirus outbreak concerns

US equities edged lower as investors came back from their long weekend with no major news flow to help drive equities into new record highs, and instead were faced with the spread of a deadly virus from China and a gloomy growth outlook from International Monetary Fund. The S&P 500 and the Dow Jones Industrial Average fell by -0.1%, while the Nasdaq Composite remained basically unchanged.

Fears of a global pandemic were raised by news of the coronavirus outbreak in China, which has killed 6 people and was recently confirmed to be able to spread between humans. As a result, tourism stocks with exposure to China and international travel have suffered such as Wynn Resorts (-4.3%), Las Vegas Sands (-4.0%), Delta Air Lines (-3.7%), United Airlines (-3.3%), MGM Resorts (-3.1%), and Booking Holdings (-2.1%). Shares of Morgan Stanley slid -3.4% after the company’s rating was downgraded to neutral by a Wall Street broker on the back of its recent share price rally. Uber Technologies shares jumped +5.2% higher after the company announced it has completed the sale of its Indian food delivery business for approximately US$355m. Shares of Halliburton climbed +1.7% higher after the oil services company reported profit and revenue that fell by less than the market had forecast. Tech stocks were helping limit losses in the market, led by gains from Tesla (+5.9%), (+2.0%) and Applied Materials (+1.5%). Companies due to report earnings before the market’s next open are IBM (+0.3%), Netflix (-0.9%), and United Airlines.

European and UK stocks continue yesterday’s downward trend

European equities improved over the course of the day, but the Stoxx Europe 600 still closed -0.1% lower amid the coronavirus outbreak fears and an average batch of corporate earnings. Shares of UBS dove -4.5% lower after it released downbeat earnings guidance despite solid fourth quarter results.

The UK’s FTSE 100 fell -0.5% after solid employment data slowed down momentum toward a rate cut by the Bank of England, and as global fears of the coronavirus outbreak ramped up. Shares of EazyJet popped +4.6% higher as the company, which doesn’t offer flights to Asia, lifted its first-half revenue guidance thanks to extra business from the demise of Thomas Cook.

Asian markets gripped by coronavirus outbreak

Asian stock markets tumbled as concerns about the economic impact of the coronavirus outbreak rose. The Hang Seng (-2.8%), China’s Shanghai Composite (-1.5%), the Kospi (-1.0%) and the Nikkei 225 (-0.9%) declined.

The ASX 200 lost -0.2% as investors struggled for inspiration with the US market closed.

Crude and gold down, iron ore flat

WTI crude fell -0.9% to US$57.99 and gold shed -0.2% to US$1,557.91, while iron ore remained flat at US$97.20/MT.

Today’s events

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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.