Global share markets rebounded over the last week on optimism the coronavirus outbreak will be contained as well as solid earnings results in the US, although they shed some of their gains on Friday on new concerns about the virus’ impact on economic growth.
European markets fell on Friday, as did Wall Street but that didn’t make much of a dent in the week’s performance.
For the week US shares were up 3.2%, Eurozone shares rose 4% and Japanese shares gained 0.7%. Australian shares edged up 0.1% reflecting our greater exposure to China and as the RBA appeared to be more hawkish on interest rates by all but ruling out another cut unless the labour market worsened or the global market took a bigger hit than expected from the coronavirus.
Chinese shares fell 2.6% but this was after being closed for more than a week due to the Lunar New Year holiday but this week could be edgy as the death toll rises, the number of infections increase and the impact starts getting clearer with some monthly economic reports and data to be released.
Reflecting the rebound in share markets, bond yields rose as did metal prices. Over the week (but not iron ore which fell around 1.5%)
But oil and iron ore prices fell and the Australian dollar again fell to its lowest level since 2009 (as it did the previous Friday) on concerns about the impact of the coronavirus outbreak on Australian export earnings to China – especially iron ore, LNG, coal, and tourism and education.
Wall Street ended lower on Friday, a day after all three benchmark indexes finished at record highs.
A strong January jobs report and rise in wages wasn’t enough to keep the market in the black.
The U.S. economy added 225,000 jobs in January, well above the 165,000 jobs expected by the market while the unemployment rate edged up slightly to 3.6% as more Americans looked for work.
Wages were up by an annual 3.1% from 2.9% in December but that is still under the 3.4% growth rate a year ago.
Also on investors’ radar were efforts to contain the fast-moving coronavirus amid a busy week of quarterly earnings reports.
The Dow Friday fell 277.26 points, or 0.9%, to end at 29,102.51, the S&P 500 index lost 18.07 points, or 0.5%, to close at 3,327.71 while the Nasdaq lost 51.64 points, or 0.5%, to close the week at 9,520.51.
Despite Friday’s falls, it was still a strong week with the Dow up 3%, the S&P 500 index advancing 3.2%, and the Nasdaq added 4%.
