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A “kitchen-sink” approach by central banks helped deliver the ASX a welcome respite at the end of a fourth week of steep losses.
The ASX 200 rallied 201 points or 4.2 per cent and – unlike on previous occasions – extended its initial gains through to mid-session. Despite the rebound, the benchmark index was on track for a weekly loss of more than 500 points after a horror week for financial markets.
A week of emergency stimulus measures has included a rate cut here, an emergency package in Europe and fresh actions by the US Federal Reserve each day to douse spot-fires. The mood on global markets improved overnight as the Fed and European Central Bank threw billions at the economic crisis triggered by the Covid-19 pandemic. A US package to help workers was moving through Congress. Japanese politicians were reportedly framing a record stimulus deal this morning.
The scramble to stem the bleeding helped Europe’s benchmark stock index rise 2.9 per cent overnight and the S&P 500 in the US bounce a more modest 0.47 percent.
Here, the morning’s best performers were mostly yesterday’s biggest losers. Jewellery retailer Lovisa surged 63.7 per cent, construction group Cimic 43.5 per cent, buy-now-pay-later leader Afterpay 44 per cent, department store Myer 26.3 per cent and property groups Scentre 26.7 per cent and Mirvac 23.2 per cent.
The battered energy sector bounced 7.6 per cent off yesterday’s 16-year low after oil reversed most of Wednesday night’s dramatic plunge, the third worst in history. Oil Search rebounded 18.7 per cent, Santos 14.2 per cent and Woodside 6 per cent. Overnight, West Texas crude surged $4.85 or 23.8 per cent to US$25.22 a barrel, its largest percentage gain since records began in 1983. The gains continued this morning with an advance of 56 cents or 2.2 per cent to US$25.78.
The financial sector clambered off its lowest level in seven-and-a-half years a day after the Reserve Bank announced a quantitative easing program to inject money into the system. CBA climbed 4.5 per cent, ANZ 8.4 per cent, NAB 10.3 per cent and Westpac 9.7 per cent.
Sonic Healthcare joined the increasing number of companies scrapping their previous earnings guidance. Shares in the medical diagnostics company sank 8.8 per cent after it warned of the impact on volumes as Australians self-isolate or delay testing. Health sector leader CSL rose 1.7 per cent.
The supermarkets retreated on a day for recovery stories, rather than safety plays. Woolworths slumped 5 per cent, Coles 2.6 per cent and IGA wholesaler Metcash 1.2 per cent.
US
index futures trimmed early losses. S&P 500 index futures
were recently down 41 points or 1.7 per cent after earlier falling more than 3
per cent.
Asian markets gained traction.
China’s Shanghai Composite put on 1 per cent and Hong Kong’s Hang Seng 2.7 per
cent. Japanese markets were closed for a holiday.
Gold climbed $4.70 or 0.3 per cent to $US1,483.90 an ounce.
The dollar jumped 1.2 per cent to 58.07 US cents after trading as low as 55.08 US cents during an extraordinarily volatile night.
What’s hot today and what’s not:
Hot today: While the falling tide has dragged everything down with it the last month, companies whose business model will hold up in the months ahead are slowly being rewarded. Shares in software company Bigtincan (ASX:BTH) jumped 62.3 per cent after the company reaffirmed its full-year guidance and said it was still experiencing “strong demand for its core products”. The company expects organic revenue growth of 30 – 40 per cent from its software for sales and services teams. The balance sheet at the end of December showed cash of $27.1 million and no debt.
Not today: Air New Zealand (ASX:AIZ) emerged from temporary suspension and sank to a seven-year low despite a government bailout. The New Zealand government threw the struggling airline a lifeline in the form of an NZ$900 million loan facility to help it ride out the coronavirus pandemic. Conditions include the scrapping of the interim dividend and any future dividends due while a government loan is outstanding. The share price fell as low as 80.5 cents before rebounding to $1.04, a loss for shareholders of 33.8 per cent.
