Market Trends and Leaders to February 2020

The leaders of the ASX in January 2020 are Health Care providers with global exposure. This is in the context of the US media having the markets focused on the Trump impeachment trial; UK and Europe focusing on the Brexit concept vs the details and reality and the rest of the world being concerned about the spread of Coronavirus.

Source: Movie 'Contagion', Warner Brothers, 2011.

The Coronavirus’ impact on markets is a combination of the immediacy of the bushfires and the reach of the World Trade Wars of 2018/19.

Australians have experienced the impact of both drought and fire over the last few months. A difficult task has been forecasting the impacts on agricultural and accommodation providers as well as tourism operators.

We have all been exposed to the Trade Wars and the leveraged reach of short media bursts disrupting long term planning and world trade. No markets on the global stage were able to trade independently of the Trade War news flows.

For now, the main drivers are the AUD falling and the companies earning in USD benefiting. Certainly, tourism companies have struggled to recoup from the thrashing of the December/January fire news flows. As the agricultural companies shot back up with the forecast of rain hitting Victoria and New South Wales however, a similar impact is possible as/when positive news flows from the global health organisations about the Coronavirus.

This key currency tailwind has benefited the healthcare companies which are definitely in need during a health crisis, especially a global crisis with earnings in USDs – as evidenced by the Health Care dominance this month.