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Market Report 19th February 2020

Market Report 19th February 2020 981 980 Realm

Investor sentiment remained fragile after Apple Inc became the latest company to warn of trouble from the coronavirus outbreak, saying it would not meet its guidance for March-quarter revenue because of slower iPhone production.

  • European stocks ended lower weighed down by concerns over the potential impact of the coronavirus outbreak in China on the global economy, Apple Inc’s sales warning, and some disappointing quarterly earnings reports.
  • US stocks moved mostly lower during trading on Tuesday as traders returned to their desks following the long holiday weekend. While the Nasdaq managed to end the day slightly higher, the Dow and the S&P 500 closed in negative territory.
  • Asian stocks ended broadly lower on Tuesday after Apple Inc warned it was unlikely to meet a sales target set just three weeks ago and reports suggested the Trump administration may force global chipmakers using American-made equipment to obtain licenses before supplying their chips to Huawei.

Global Macro

  • The UK unemployment rate stood at 3.8% in the three months to December 2019, the lowest level since early 1975 and in line with market expectations. Employment increased by 336,000 (or 1.0%) compared with the same period a year ago to a record high of 32.93 million. Over the same period, unemployment reduced by 73,000 (or 5.4%) to 1.29 million, and economic inactivity reduced by 155,000 (or 1.8%) to 8.48 million.
  • The seasonally adjusted unemployment rate in Hong Kong rose to 3.4% in the three months to January 2020 from 3.3% in the prior period and above market expectations of 3.3%. It was the highest jobless rate since the three months to November 2017. The number of unemployed persons was down by around 1,700 to 122,300 and the number of underemployed was 47,400, the same as in the previous period. Meantime, the number of employed fell by 14,600 to 3.80 million and the labour force also decreased by around 16,300 to 3.93 million. The unemployment rate in the consumption and tourism-related sectors stayed at 5.2%, the highest in more than three years while the jobless rate of the construction sector increased further to 5.7%, the highest level in close to six years. The labour market is expected to be subject to even more pressure in the near term, as the coronavirus outbreak has already caused severe disruptions to a wide range of economic activities.
  • In the near term, economic growth in Australia was expected to be weaker than had been forecast three months earlier, the Reserve Bank of Australia’s February meeting minutes showed. Partly because of the effects of the coronavirus outbreak and bushfires, it added. Members reviewed the case for a further reduction in the cash rate at the present meeting, but considered the risks outweighed the benefits.

Disclaimer:  ‘Where the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.