Wall Street slips from records; ASX set for steady session despite China virus outbreak

Updated

January 22, 2020 12:04:08

Photo:
The outbreak comes ahead of the Lunar New Year holiday when many of China’s 1.4 billion people will be travelling. (Reuters: China Daily CDIC)

The Australian share market has rebounded, hitting fresh records, despite fears of a deadly virus outbreak spreading beyond China causing global markets to fall.

Market snapshot at 9:05am (AEDT):

ASX SPI futures -2pts at 7,006, ASX 200 (Tuesday’s close) -0.2pc at 7,066
AUD: 68.44 US cents, 52.45 British pence, 61.75 Euro cents, 75.19 Japanese yen, $NZ1.037
US: Dow Jones -0.5pc at 29,196, S&P 500 -0.3pc at 3,321, Nasdaq -0.2pc at 9,371
Europe: FTSE 100 -0.5pc at 7,611, DAX +0.1pc at 13,556, CAC -0.5pc at 6,046, Euro Stoxx 50 -0.3pc at 3,789
Commodities: Brent crude -1pc at $US64.52/barrel, spot gold flat at $US1,558.24/ounce

By 12:00pm (AEDT), the ASX 200 had risen by 0.5 per cent to 7,104 points — while the broader All Ordinaries index was up by a similar level to 7,218.

The local market had broken its record highs for five days in a row, before snapping its winning streak on Tuesday.

Meanwhile, the Australian dollar fell moderately to 68.37 US cents, down about half a per cent.

The weaker currency may be related to concerns that the Australian economy is “vulnerable to further spread in the coronavirus, given the close economic relationship with China,” said NAB’s senior foreign exchange strategist Rodrigo Catril.

“The move in the Australian dollar is still small in magnitude, but given concerns over how dangerous the virus is and the rapid rise in cases, the Australian dollar is likely to remain under pressure as China’s equity market and Chinese yuan are likely to struggle.”

Infection risk ahead of Lunar New Year

On Wall Street, it was a stark contrast to last week’s optimism, when the main share indices jumped to record highs after the US and China signed a “phase one” trade deal and there was an upbeat start to earnings season.

The S&P 500 and Nasdaq indices lost 0.3 and 0.2 per cent by the close.

But the blue chip Dow Jones index was hardest hit, down 135 points (or 0.5 per cent) to 29,213.

Some of the worst affected US stocks overnight were ones that rely on foreign tourism, including Tripadvisor (-1.5pc), casino giant Wynn Resorts (-6.3pc) and United Airlines (-4.4pc).

Worries about the coronavirus intensified because it comes just days ahead of the Lunar New Year, when hundreds of millions of people are expected to travel around China and across the world.

The outbreak, which began in the central Chinese city of Wuhan, also worried financial markets as investors recalled China’s severe acute respiratory syndrome (SARS) epidemic in 2002-2003, which killed nearly 800 people.

“The fear is that it could be a SARS-type event, which was an economic issue,” said Ellis Phifer, market strategist at US financial services firm, Raymond James.