Tuesday, January 28, 2020

Global equity markets retreat as investors shifts to safe havens

Tags
  • China
  • Gold
  • Yen
  • Stocks
  • US earnings' season

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Market Recap: Global equity markets retreat as investors shifts to safe havens

Major indices all over the world fell on Monday as the potential negative economic impact that the coronavirus outbreak in China could have grew. China extended the Lunar New Year holiday to February 2 nationally and February 9 for Shanghai in a bid to slow the spread of the virus. There are now more than 2,700 confirmed cases of the coronavirus in China, with the death toll rising to 81. The DJIA, S&P500 and Nasdaq all slid more than 1%, while European indices including the FTSE100, Dax and Euro Stoxx tumbled more than 2%.

Indexes Change (%) Net Change Closing Price
Dow Jones -1.57% -453.93 28,535.80
S&P500 -1.57% -51.84 3,243.63
Nasdaq -1.89% -175.60 9,139.31
*Source: Bloomberg

Global indices also declined over last week thank to fears of the virus outbreak as well. The Nasdaq made its first weekly loss after 6 straight weeks of gains.

Indexes Change (%) Net Change Closing Price
Dow Jones -1.22% -358.37 28,989.73
S&P500 -1.03% -34.15 3,295.47
Nasdaq -0.79% -74.03 9,314.91
FTSE100 -1.15% -88.58 7,585.98
Euro Stoxx -0.76% -29.10 3,779.16
Nikkei -0.89% -214.08 23,827.18
KOSPI -0.20% -4.44 2,246.13
ASX200 0.37% 26.41 7,090.54
Hang Seng -3.81% -1106.78 27,949.64
Straits Times -1.25% -41.01 3,240.02
*Source: Bloomberg

The aussie sharply declined thanks to its large exposure to the Chinese economy. Investors used the kiwi and aussie as proxies for positioning against the virus outbreak as the two countries' economy remain highly dependent on the Chinese economy. The kiwi retreated 0.89% while the aussie tumbled 1.04% against the dollar on Monday.

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Safe haven assets surged on Monday as demand for lower risk assets surged. Gold, yen and franc all advanced on Monday. US Treasuries surged as well, pulling benchmark 10-year yields 8bps lower to 1.61%.

Safe Haven Assets Change (%) Net Change Closing Price
Gold 0.67% 10.53 1,582.06
Silver 0.00% 0.00 18.05
JPY 0.35% 0.38 108.90
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year -5 1.44%
10-Year -8 1.61%
30-Year -8 2.06%
*Source: Bloomberg

Oil fell below US$60 per barrel as it continues to face pressure of possible decline in demand thanks to the virus outbreak. Brent and WTI crude oil futures fell sharply on Monday, declining 2.26% and 1.94% respectively.

Oil Futures Change (%) Net Change Closing Price
Brent Crude -2.26% -1.37 59.32
WTI Crude -1.94% -1.05 53.14
*Source: Bloomberg

Asian stocks are likely to track US losses as most investors in Asia come back from the Lunar New Year holiday. The Nikkei, KOSPI and ASX200 fell 0.93%, 2.04% and 0.55% during market open on Tuesday.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -0.96% -224.56 23,118.95 8:58:40 AM
KOSPI Index -2.64% -59.35 2,186.78 9:18:40 AM
ASX200 Index -1.33% -94.54 6,996.00 9:18:35 AM
*Source: Bloomberg

Apple is scheduled to have its earnings call at 6am (GMT +8) on Wednesday. Also, Harley Davidson (after US market close), 3M (after US market close) and Xerox holdings are set to release their respective earnings reports as well.

Economic releases for the day include (all timings in GMT +8):

  • US Dec Durable Goods Orders (9.30pm)