Daily market review

United States

Equities fell again Friday as markets continued to struggle to price in the impact of the spreading coronavirus, but prices recovered dramatically into the close. The Dow industrials ended down 1.0 percent, the S&P 500 fell 1.7 percent, and the NASDAQ was off 1.9 percent.

All sectors fell, with energy and financials leading the selloff on falling oil prices and falling interest rates. Health care, consumer staples, and industrials outperformed but still showed losses. Airlines and hotel stocks saw bargain-hunting after their extraordinary selloff on the virus shock.

The day's featured losers included Costco, off 1.4 percent, despite reporting big earnings and same-store sales gains. Dow member JP Morgan fell 5.2 percent partly on news that its CEO, Jamie Dimon, had undergone heart surgery. Starbucks fell 1.1 percent because of a business hit from closures of many stores in China and elsewhere. Oil stocks Diamondback Energy (off 17 percent) and Devon Energy (down 16 percent) were among the big losers. In financials, Bank America was typical, off 4 percent, and Wells Fargo lost 5 percent.

In US economic news, nonfarm payrolls surged 273,000 in both February (initial data) and January (revised data), far surpassing Econoday's consensus ranges. The unemployment rate edged 1 tenth lower to revisit historical lows at 3.5 percent as the number of unemployed actively looking for work fell 105,000 to 5.787 million.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil dropped US$4.70 to US$45.25, while gold rose $1.80 to US$1,674.90. The US dollar fell against most major currencies. The US Treasury 30-year bond yield plunged 25 basis points to 1.29 percent while the 10-year note yield fell 15 basis points to 0.77 percent.


Coronavirus fear knocked equities down again Friday, with falling oil prices hitting energy stocks, on news of more virus cases and economic fallout. The Europe-wide STOXX 600 dropped 3.7 percent, the German DAX fell 3.4 percent, the French CAC lost 4.1 percent, and the UK FTSE-100 was off 3.6 percent.

Oil & gas shares led the selloff, along with basic resources, construction, financial services, utilities, and industrials. Relative outperformers included autos, travel & leisure, telecom, and media, but everything was down sharply.

Airbus was off 6.2 percent after reporting no orders in February. Tullow Oil, the Irish driller, was off 15 percent on falling oil prices. Infineon, the German chipmaker, fell 5.6 percent on reports regulators would reject its proposed acquisition of Cypress Semiconductor.

In economic news, German manufacturers posted a sharp rebound in orders at the start of the year. Following an unrevised 2.1 percent monthly drop in December, January saw a rise of 5.5 percent, more than three times the market consensus. Annual growth climbed from minus 8.6 percent to minus 1.4 percent.

Asia Pacific

Major Asian markets closed the week with heavy losses Friday, again following the lead set by US markets Thursday, though performance over the week was mixed. Shares in major airlines fell sharply across the region Friday on renewed concerns about the spread and effect of the global coronavirus outbreak. Regional data released Friday mainly pre-dated the main impact of the outbreak, with investors focused instead on the release of Chinese trade data over the coming weekend.

Japan's Nikkei and Topix indices fell 2.7 percent and 2.9 percent respectively on the day and closed the week down 1.9 percent and 2.6 percent respectively. Australia's All Ordinaries index fell 2.9 percent on the day and 3.4 percent on the week. Hong Kong's Hang Seng index also posted a large fall on the day, down 2.3 percent, but closed the week up 0.1 percent while the Shanghai Composite index outperformed over region markets with a drop of 1.2 percent on the day and a gain of 5.4 percent on the week.

Retail sales in Australia fell 0.3 percent on the month in January after falling 0.5 percent in December and advanced 2.2 percent on the year, moderating from growth of 2.4 percent previously. These data reflect the impact of serious wildfires in many parts of the country over the new year period but officials warned that the coronavirus outbreak will also have a large impact on retail sales in coming months.

Household spending in Japan fell 3.9 percent on the year in January after falling 4.8 percent in December, weaker than the consensus forecast for a drop of 3.0 percent. This weakness was broad-based across major categories, with core household spending also down sharply on the year. Data published last week showed retail sales fell 0.4 percent on the year in January after falling 2.6 percent in December.

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