Aussie dollar sinks as volatile Wall Street rebounds despite coronavirus fears


Australian shares are trading higher as investors shrugged off the coronavirus’ potential economic impact — despite the World Health Organisation (WHO) declaring the outbreak a global health emergency.

Market snapshot at 8:05am (AEDT):

  • ASX SPI futures +0.5pc at 6,976, ASX 200 (Thursday’s close) -0.3pc at 7,008
  • AUD: 67.2 US cents, 51.32 British pence, 60.9 Euro cents, 73.2 Japanese yen, $NZ1.035
  • US: Dow Jones +0.4pc at 28,859, S&P 500 +0.3pc at 3,284, Nasdaq +0.3pc at 9,299
  • Europe: FTSE 100 -1.4pc at 7,382, DAX -1.4pc at 13,157, CAC -1.4pc at 5,872, Euro Stoxx 50 -1.2pc at 3,691
  • Commodities: Brent crude -1.4pc at $US58.99/barrel, spot gold -0.2pc at $US1,573.91/ounce

By 12:25pm (AEDT), the ASX 200 index had lifted by 0.5 per cent to 7,044 points, with every sector trading higher.

Healthcare and information technology were the best-performing sectors, boosted by Avita Medical (+6.6pc), Resmed (+4.6pc) and investment services provider Link Administration Holdings (+9.7pc).

Link’s share price surged after the company revealed it would take over a European non-bank lender, Pepper Group, for up to 200 million euro ($322m).

On the flipside, the weakest performers were gold stocks, including Gold Road Resources, Silver Lake Resources and Newcrest Mining, which were down between 2.2 and 4.5 per cent.

Meanwhile, the Australian dollar briefly sank below 67 US cents overnight, its lowest value since early October.

The local currency has since lifted back to 67.2 US cents.

It had also dropped sharply against the UK’s sterling (-1.1pc), euro (-0.8pc) and Japanese yen (-0.9pc) at its worst.

The British pound jumped after the Bank of England left interest rates unchanged at 0.75 per cent — in the final policy meeting chaired by BoE governor Mark Carney before he steps down.

There was a 50-50 chance that the central bank would cut rates, according to market pricing.

It also happens to be the day on which Brexit is finally happening, as the UK nears its final hours as a member of the European Union.

Last minute comeback

The local market is following a positive, but volatile, lead from Wall Street.

US markets spent most of their day in the red, but erased all their losses in the last few minutes of trade — after WHO declared the global health emergency.

‘Global health emergency’
The WHO has declared the coronavirus outbreak a public health emergency — here’s what that means.

The Dow Jones closed 125 points higher (+0.4pc) — a significant recovery considering the industrial-skewed index had fallen by as much as 244 points earlier in the session.

The benchmark S&P 500 and Nasdaq gained 0.3 per cent each, also rebounding from the worst of their losses.

This was despite the release of official figures showing that the US economy missed the Trump administration’s goal of 3 per cent growth for the second year in a row.

It was also America’s slowest annual growth in three years (in 2019) as the slump in business investment deepened amid its damaging trade wars — particularly with China.

Gross domestic product (GDP) grew by 2.3 per cent last year, according to the US Commerce Department.

It suggests the White House and Republicans’ massive $US1.5 trillion corporate tax cuts only provided the US economy with a temporary boost.

European markets ended their session lower with the benchmark indices of London, Frankfurt and Paris down 1.4 per cent each.

Brent crude dropped 1.7 per cent to $US58.78 per barrel on concerns that the coronavirus will lead to slower demand for oil from China.

Facebook plummeted by 6.1 per cent to $US209.53 per share after the social media company warned of slowing growth as its business matured, in addition to reporting a surge in quarterly expenses.

Meanwhile, spot gold lifted by 0.1 per cent to $US1,578 an ounce as virus fears lingered on the minds of investors seeking safe haven assets.