A recovery in the big banks helped the share market cut its losses for the week despite a torrid session for airline investors.
The S&P/ASX 200′s final tally forthe week was a loss of 38.5 points or 0.6 per cent despite a partial recovery today from yesterday’s 2.5 per cent loss. The index bounced 86 points or 1.5 per cent today, with ten of eleven sectors recovering lost ground.
A week that began with a run of three cautious gains soured after heavy falls on Wall Street on Wednesday night as the US recorded its biggest daily increase in new coronavirus cases since April. Sentiment improved overnight after US regulators cut red tape to help free up working capital for banks facing an anticipated wave of bad debts.
US index futures dipped as the ASX closed following an edict earlier in the day from the Federal Reserve that banks suspend share buybacks and limit dividend payouts. S&P 500 index futures slid five points or 0.2 per cent.
The Australian financial sector took its lead from its US counterpart, rising 2.7 per cent. Westpac led the advance with a gain of 3.3 per cent. ANZ put on 3 per cent, NAB 2.7 per cent and Commonwealth Bank 2.4 per cent. Asset manager IOOF Holdings was the index’s standout performer, rising 8.5 per cent. Other money managers also performed well. Magellan added 5.4 per cent, AMP 4.8 per cent and Challenger 4.3 per cent.
Virgin Australia shareholders hoping to rescue something from their investment endured a rollercoaster session. The two-horse race for the airline appeared to fall into disarray when Cyrus Capital dropped out this morning, citing the administrator’s failure to engage with its offer. But within hours Virgin announced rival private equity firm Bain Capital had entered an agreement to buy the airline. A third option remains open with unsecured bondholders banding together for a possible pitch when creditors meet to consider the Bain plan to relaunch the airline. Shareholders stand at the back of a long queue with minimal prospects of a return.
Qantas announced drastic measures yesterday to avoid the same fate as Virgin. The airline will cut around a fifth of its workforce and slash costs by $15 billion over three years. The share price slumped 9.1 per cent today after the airline raised almost $1.4 billion at a substantial discount to the last traded price.
Shopping centre operators Goodman Group and Scentre advanced 2.6 per cent and 3.3 per cent, respectively, as the real estate sector attracted a bid. Stockland and Vicinity Centres both gained 2.9 per cent.
Energy stocks were boosted by an ongoing rebound in crude oil. Woodside gained 2.4 per cent, Oil Search 2 per cent and Santos 0.6 per cent. Brent crude added another 54 cents or 1.3 per cent today to last night’s 74 cent rally, reaching $US41.59 a barrel.
Aside from Qantas, CSL was the biggest drag on the index, easing 0.4 per cent from yesterday’s three-week closing high. Other notable losses on the index included travel agent Flight Centre and Penfolds owner Treasury Wine Estates, both down 1.2 per cent.
Asian markets were mixed as the ASX shut up shop for the week. Hong Kong’s Hang Seng was down 0.8 per cent following yesterday’s public holiday. Japan’s Nikkei was ahead 1.1 per cent. Chinese markets remained closed for a second day of holidays.
Gold drifted lower for a third session, lately off $2.30 or 0.1 per cent at $US1,768.30 an ounce.
The dollar was ahead less than 0.1 per cent at 68.88 US cents.
Hot today: Investors in Chase Mining (ASX:CML) saw their investment almost double after the first drill-hole of a new drilling campaign at the explorer’s Alotta nickel-copper project in Quebec intersected massive sulphides. The hole hit two zones, including a “spectacular porphyr”. With drilling on a second hole commencing last night, speculators piled in during the last hour of trade, lifting the share price 95 per cent from 2 cents to 3.9 cents.