Weekly Market Update – 10 Mar 2020

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Key market themes

Update on the coronavirus

  • The Italian Prime Minister Tuesday morning announced a nationwide ‘quarantine’ restricting travel without a business or health-related justification until at least April 3rd. Schools and universities are already closed and public events will be cancelled.
  • President Trump plans to unveil a fiscal aid package on Tuesday designed to alleviate some of the pressures on business and individuals in the wake of coronavirus quarantine measures. The package will likely see a payroll tax cut and paid sick leave for those hourly workers quarantined by the virus.

U.S. Politics

  • Joe Biden’s success in winning 10 of the 14 states up for grabs at last week’s Super Tuesday has put him in a strong position to win the Democrat nomination and to challenge President Trump at the November election
  • Trump’s questionable handling of the coronavirus contagion has dented his poll standing and seen Biden leap to near enough neck and neck in the odds for

Economic data released

US Economic data finished February strong and untouched by virus concerns

  • Manufacturing data has stabilised with the new year and China trade deal, whilst consumer confidence and small-business confidence remains elevated and untouched by coronavirus fears
  • February payroll data surged by 273,000 jobs

Australian economic data however remains as mixed as ever

  • Weekly ANZ Consumer Confidence this week dropped to its lowest level on record
  • January Building Approvals saw a substantial monthly pullback that took annual approvals -15%. Apartment approvals dropped to their lowest monthly figure since 2013.
  • February Australian Industry Group data on the Construction industry remain significantly in contraction
  • Q4 GDP posted an annual rate of 2.2%, marginally ahead of expectations

Observations from the past week

High Yield Credit Spreads blow out

Alongside the sell-off in global equity indices, corporate credit markets similarly saw investors seeking to de-risk portfolios.

The chart below shows the average spread above swap rates on US High Yield bonds which this month has blown out from 300bp over to 642bp over currently, but remains below the levels achieved during the European debt crisis in 2011 and an eerily similar sell-off in 2015 when oil prices collapsed and led to fears of defaults from highly indebted oil exploration companies.

Source: Bloomberg

Looking ahead

  • Monday: N/A
  • Tuesday: AU NAB Business Confidence (Feb), US NFIB Small Business Confidence (Feb)
  • Wednesday: AU Westpac Confidence (Mar)
  • Thursday: US Bloomberg Weekly Confidence
  • Friday: US Michigan Consumer Sentiment (Mar)

Friday 5pm values

All Ordinaries 5822-689-10.6%
S&P / ASX 2005760-681-10.6%
Property Trust Index1507-72-4.6%
Utilities Index7716-116-1.5%
Financials Index4987-917-15.5%
Materials Index11034-1356-10.9%

Friday closing values

U.S. S&P 5002746-208-7.0%
London’s FTSE5966-614-9.3%
Japan’s Nikkei19968-1174-5.6%
Hang Seng25040-1089-4.2%
China’s Shanghai2943+63+2.2%

Key dividends

  • Monday 9th March 2020: Div Ex-Date – QUBE (QUB), REA Group (REA). WBCPI; Div Pay Date – Metrics (MXT, MOT)
  • Tuesday 10th March 2020: Div Ex-Date – Reliance Worldwide (RWC), Sonic Healthcare (SHL); Div Pay Date – MQGPD
  • Wednesday 11th March 2020: Div Ex-Date – ANZPG/ANZPH BWX (BWX), Brambles (BXB), CSL(CSL), NABPE, Regis Healthcare (REG); Div Pay Date – APA (APA)
  • Thursday 12th March 2020: Div Ex-Date – Costa (CGC), NABPC, WBCPE/WBCPF/WBCPH
  • Friday 13th March 2020: Div Ex-Date – ANZPE/ANZP, Boral (BLD); Div Pay Date – Domain (DHG), Dominoes (DMP)

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