Coronavirus fears continue

A Sniippet of the weekly news #4 – Feb 2020

Despite last week’s positive news from Chinese authorities the coronavirus has sent shockwaves through financial markets again this week. Technology behemoth Apple announced overnight that its supply chain has been affected by the outbreak and that sales for the quarter were likely to be affected. In other finance news Australian economists continued their warnings on the Australian economy with many now believing that the government’s budget surplus has likely been wiped out.

Markets catch a light sneeze from the coronavirus

Although arguably predictable given recent news from China many market participants were still caught off guard by a recent Q1 sales warning from market leader Apple. Almost 30 billion US was wiped off Apples market cap in overnight trading with ripple effects flowing through to the stock prices of its suppliers. Gold surged overnight on a flight to safety with the barbarous relic gaining 1% to push past $1,600 USD an ounce.

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Bushfires, coronavirus and the drought tear into government finances

Australian economists have run the numbers and it’s not looking good for treasurer Josh Frydenberg. The much-vaunted budget surplus is almost certainly wiped out as fresh estimates of impact of the coronavirus and the Australian bushfires start to trickle in. Economists are also concerned that the scale of the drought has been underestimated with recent figures indicating its impact on Australian GDP could be as high as .25%. The strong hits to economic growth and the increase in government spending to try and deal with the impact of the disasters means that at this point a budget deficit is almost guaranteed.

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Young Australians lose faith in private health care

Private health insurance is seeing customers fleeing for the exits with young people between the ages of 25 and 29 leading the charge. As inflows dry up private health suppliers have begun attacking themselves with various parts of the industry trying to attribute blame on one another. The infighting will likely intensify as more and more young people exit the system skewing fund demographics towards the older, more expensive, end of the spectrum. Some market watchers are concerned the industry may even be in a death spiral as younger and fitter customers cancel, taking their premiums out of the system while leaving funds still holding the bag for their more elderly higher claiming members.

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