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Morning Market Wrap: Tech stocks lead U.S. markets to new highs

11 Feb 2020
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U.S. markets appeared to look past the impact of the coronavirus as the effects appear to remain mostly confined within China…

Stock Markets

All major US markets closed higher, led by the NASDAQ with a 1.13% gain driven by advances across major tech stocks. The NASDAQ closed at a new record high of 9,628 as Amazon.com Inc (AMZN) and Microsoft Corporation (MSFT) both climbed 2.62%. Similarly, the S&P500 reached a record high as investors responded well to mostly solid U.S. fourth-quarter corporate earnings and looked beyond concerns about the coronavirus outbreak’s potential disruption to global growth rates. Of the 324 S&P 500 constituents that have reported so far, over 70% have beaten earnings estimates, which is above the long-term average of 65%, according to IBES data from Refinitiv.

The ASX200 closed 10 points lower at 7,012 as early declines by blue-chip heavyweights offset gains in Healthcare and Consumer Discretionary. The index declined to a low of 6,982 early in the session as perhaps local markets priced in marginal profit taking seen across U.S. markets following Friday’s close.

Decliners outpaced climbers 113 to 74 as 58% of the indexes market-cap reduced in value. Healthcare was the standout performer with a 0.69% advance, gained on the back of a 0.92% jump by CSL Limited (CSL). JB Hi-Fi Limited (JBH) was the best performer on the day and climbed 11.50% higher after reporting better-than-expected results. Other significant contributors that helped to marginally offset market declines, outside of CSL and JBH, included Evolution Mining Limited (EVN), Woolworth Group Limited (WOW) and Newcrest Mining Limited (NCM) with a respective gain of 7.69, 0.91 and 2.17 per cent. EVN and NCM advanced with the All Ordinaries Gold Index, which climbed 2.37% on the back of continued strengthening in global gold prices.

The biggest drag on the market came from a 0.95% decline by BHP Group Limited (BHP) and a 0.57% retracement by Commonwealth Bank of Australia (CBA). Similarly, Boral Limited (BLD) declined 10.58% after downgrading net-profit expectations and announcing the early retirement of the current CEO, Mike Kane. This follows a December reports related to BLD’s window business, which was found to have overstated earnings.

Airlines continued to face selling pressure following heightened worried about the spread of the coronavirus with Flight Centre Travel Group Limited (FLT) falling 4.5%, after weekend updates of the spread of the virus. As of February 10, the World Health Organisation (WHO) formal situation report confirmed 40,554 global cases and 909 deaths across 24 countries.

*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

Commodities and Currencies

Iron ore closed 0.8% lower at $US82.88 a tonne, and Brent Oil close 2.1% lower at $US53.31 a barrel as concerns related to the coronavirus continued to impact demand forecasts. Gold climbed for fifth-consecutive day and closed 0.24% higher at $US1,572.36 an ounce.

To read more about the earnings results of J.B. Hi-Fi Limited (JBH) and the ASX Momentum Strategy it is held in, please click here.

This article was written by Thomas Brunton – Senior Equity Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.

 

 

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