Bigger than before Overnight Highlights Need to Know - Kennedy Partners
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Wednesday, 12 February 2020
Overnight Markets Overnight Highlights
Need to Know
Bigger than before
A new virus is putting China’s rise into sharp perspective.
Economic growth rebounded quickly after the 2003
outbreak of Severe Acute Respiratory Syndrome (SARS)
which originated in the People’s Republic and killed nearly
800 people. Stronger preventative measures this time are
offset by a potentially more contagious coronavirus that
has already infected at least 2,835 and killed 81. What’s
more, the world’s second-largest economy, already weak,
now accounts for a much larger share of global growth.
No wonder investors are jittery.
Stock stumbled from Japan to Europe on Monday, and oil
prices slumped almost 3%. The impact on financial
markets closer to the virus’ epicentre will probably be
sharper, but only felt when Hong Kong’s stock market
reopens after the Lunar New Year on Wednesday.
Productive activity on the mainland is now heavily
disrupted with much of Hubei province, home to nearly
60 million people, facing some kind of curbs on travel.
Authorities also extended the annual week-long holiday
for manufacturers in the eastern hub of Suzhou all the
way to the financial capital of Shanghai.
Although the new virus appears less deadly, it is a bigger
economic threat to China than past outbreaks. The
country’s gross domestic product was expanding at close
to double-digit rates when SARS struck. Now growth is set
to slow from 6.1% in 2019 to 5.8% in 2021, according to
the International Monetary Fund.
GLOBAL MARKET
Global Equities. Global stocks plunge as coronavirus
fears mount. Dow drops 1.5%, Dax down 2,7%.
Ifo casts doubt on German economic turnaround.
Business climate fall from Dec and came in at 95.9
below consensus of 97. More worryingly: Forward-
looking expectations component slid even more
markedly to 92.9 counter to forecasts that it would
rise to 94.8.
The Coronavirus epidemic has a likely huge
impact on tourism from China to the rest of the
world, ADMISI's Ostwald says.
Tech stocks have rallied twice as fast as the S&P500
since 2019. Nasdaq 100 valuation is highest since
2007 ahead of earnings. Apple, Microsoft, Facebook
among companies scheduled to report next week
ASX MARKET
ASX to open lower amid global sell-off, Westpac expects Reserve Bank of Australia and US
ASX futures were down 89 points or 1.3% to 6913 near Federal Reserve to delay rate cuts.
8.15am AEDT. The local currency plunged 1.1 per cent
to US67.60¢, its lowest since mid-October.
Avg Aussie mortgage size Dec-19: $538,588 (PY:
$507,948)
Westpac now expects that the Reserve Bank will delay its
next cut in the cash rate to April with the final cut to 0.25%
occurring in August. Prior to the release of the surprisingly
strong December Employment Report we had expected
the cuts to be timed for February and June. Our analysis
of the December Board Minutes highlighted that, with the
Board committing to review its assessment of the
economy in February, it seemed likely that the Board
would have been prepared to cut the cash rate by 0.25%
at that meeting. However, we did note that, “The flow of
economic data over the next six weeks will be critical to
AUS Q4 CPI (Westpac)
that decision, particularly the labour market; retail sales
and confidence”. (Economic Bulletin, December 17).
Although the November retail sales report printed a
strong 0.9%, we were comfortable to attribute much of
that out performance to the “Black Friday” effect
expecting a sizeable pull back in retail sales in December,
(to be released on 6th of February). The Westpac-MI
Consumer Sentiment Index fell by 1.8% in January to 93.4
– consistent with a down beat consumer. However, the
Employment Report was always going to be the most
important data release. Recall that in the December
minutes the Board concluded that, "The Board would
continue to monitor developments, including in the
labour market, and was prepared to ease monetary policy
further if needed to support sustainable growth in the
economy, full employment and the achievement of the
inflation target over time”.
NEED TO KNOW:
$500 million has been donated for
bushfire relief, but only a fraction has
reached victims. Here's why. The Red Cross
BusinessInsider – 24/01/2020 Since Constance gave it a tongue lashing, the Red Cross
has defended its strategy, explaining that while it has
received $115 million, only $30 million will be spent on
immediate relief so the charity can guarantee its ongoing
support.
“Communities take a long time to recover. So what we are
using our donated funds for is supporting our teams on
the ground, at the evacuation centres and recovery
centres… helping communities with their immediate
needs but also their longer-term recovery which will take
many years,” NSW and ACT director Poppy Brown told
ABC Breakfast on Thursday, noting anyone who had lost a
house was eligible for an immediate $10,000 grant.
Those families who have lost a family member to the fires
are eligible for a $20,000 bereavement payment to meet
It’s the question being asked of bushfire donations, with unmet needs such as funerals and related expenses, the
NSW minister Andrew Constance, local member for one Red Cross has advised Business Insider Australia. Those
of the worst-Bega, one of the worst-affected areas, two forms of payment have seen about $1 million go “out
calling on charities and government to move quickly. the door” every day, Brown said.
“The money is needed right now, not sitting in a Red The Red Cross denied however the remainder was only
Cross bank account earning interest so they can map out going to marketing, with Brown revealing a maximum of
their next three years and do their marketing,” 10%, or roughly $11.5 million of the money, would be
Constance told media this week. spent on administrative items like fuel for cars and
Constance isn’t alone in his frustration. A significant computers.
amount of money destined for bushfire-affected regions “Any interest that is earned on those [remaining] funds,
has been held up, leaving those affected in the lurch. those funds are kept entirely separate to the rest of the
“The recovery has been too slow and I think that Red Cross. Any interest earned will go out to those
criticism is just,” NSW disaster minister John communities affected,” Brown added.
Barilaro said this week, announcing some Service NSW The remaining $73 million or so will be spent on the
staff were to exclusively deal with bushfire assistance. ongoing recovery efforts over the next three years, in
Around $500 million has generously been raised so coordination with government and community groups.
far for bushfire relief, including more than $50 million “Our recovery programs will include mental health and
by comedian Celeste Barber, multi-million dollar wellbeing, support for children and people who are
donations by celebrities and companies, and of course, vulnerable, community support events and more,”
countless smaller individual donations. Australian Red Cross CEO Judy Slatyer said in an additional
Many however are now asking where that money is, statement issued to Business Insider Australia. “It will be
how it will be spent, and why it hasn’t in many cases guided by consultations with affected communities and
reached the people who need it most. our own extensive experience in disaster recovery.”
The charity confirmed its bushfire appeal has raised $12.5 The Salvation Army, Saint Vincent de million, of which $2.4 million has been distributed Paul and WIRES have also received nationally with a further $250,000 to go out in the next millions of dollars’ worth of donations few days. Vinnies claimed it was still assessing how to best While the Red Cross is believed to be the biggest put the remaining $10 million to good use. recipient of Australian goodwill, other major charities “The process of assessing people and establishing their are in similar boats as they grapple with how to best need does take some time but we are focused on helping distribute a record amount of aid. as many people as possible as quickly as we can,” the “Charities may find themselves in an unfamiliar organisation said in a statement. “As we access more situation over the coming months – a sudden influx of communities and establish need, we are also accelerating donations and funds means they have greater capacity the rate of response.” to provide assistance than ever before, but it can These statements indicate the challenge facing charities, present challenges,” commissioner for the Australian which have found themselves inundated with vast sums Charities and not-for-profits commission Gary of money. Johns wrote on Thursday. “As a not for profit organisation that has been surviving “At this time, meeting the needs of the community is a hand to mouth for the past 34 years, the concern and key priority, but donors need confidence that their generosity we are receiving both here and from around funds are helping those in need.” the globe is overwhelming, to say the least,” a A Salvation Army spokesperson confirmed on Thursday spokesperson for wildlife organisation WIRES told it had only received around a quarter of the money Business Insider Australia. “Understand we have been pledged to it, hoping Australians and companies would dealing with crisis rescues since the fires started and the soon honour their commitments. welfare of injured, orphaned and displaced native animals “To date, we have distributed $8.4 million – [or] 80% – and our volunteers have been our primary focus.” of the $11 million that has been received in funds. Over The organisation said it had committed $3 million into $42 million has been pledged to The Salvation Army three different emergency wildlife rescue and care since the Disaster Appeal was launched on 9 November programs. WIRES said it had established a $1 million 2019,” it said in a statement provided to Business national frontline fund to cover the costs of rescuing and Insider Australia. caring for animals affected and another $1 million to the “Money that has been raised during this period will be Australian Veterinarian Association (AVA) to support vets spent or committed by June 2020 to the immediate and and practices affected during the crisis. WIRES have also longer-term recovery,” Salvation Army lieutenant distributed $1 million over the last two months to 28 of its colonel Neil Venables said. branches across NSW. The St Vincent De Paul Society has also had to defend “It is vital that we immediately get the funds out to those itself, confirming on Thursday all donations would be wildlife volunteers taking care of animals that are injured used to support bushfire victims. and/or orphaned,” WIRES CEO Leanne Taylor said in a “Vinnies will not, and has never kept funds from disaster statement. “Nationally, vets provide vital support to the appeals for any other work or cause,” wildlife sector and we want to ensure that veterinary a statement reads. “No administration fees are taken hospitals/clinics operating within fire-affected regions or from this appeal, meaning the money raised goes providing specialist services are well supported to assist directly to the relief and recovery effort.” with rehabilitation efforts.”
GRAPHS OF THE DAY: Amazon Prime Video Gives Amateur How-To’s, Conspiracy Theories a Stage Amazon boasts that its library of more than 70,000 movies, television shows and videos is several times bigger than top rivals like Netflix Inc. and Walt Disney Co.’s Hulu.
On Saturday evening, Canada’s Ontario provincial health officials confirmed the first coronavirus case in the country. They said the patient had been in hospital since Jan. 23 and had previously travelled to Wuhan.
S&P 500 SECTORS PERFORMANCE. Data from 24/12/2018 thru 17/01/2020 with Information Technology is up to its highest level in 2 years.
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