The share market struggled higher for a third day through a blizzard of cancelled dividends, store closures and job losses.
While the coronavirus pandemic continued to wreak havoc on the economy, investors looked through the strife towards the inevitable rebound. The ASX 200 rallied 55 points or 1.1 per cent to 5053, positioning the index for its first three-day advance since mid-February. Today’s rise extended the index’s rebound from Monday’s seven-year low beyond 650 points.
The rally slowed this morning after a US$2 trillion US economic rescue package hit a speed bump on Capitol Hill. A Senate vote was delayed as political divisions re-emerged over a provision to support furloughed workers. The delay took some of the shine off a strong US stock market rally overnight. The S&P 500 closed 28 points or 1.15 per cent ahead after being up as much as 5.1 per cent. S&P 500 index futures this morning slipped 17 points or 0.7 per cent.
Back home, not a day passes without news of store closures and job losses as companies batten down for what in the best-case scenario looks like a short, sharp recession. Travel Agent Flight Centre announced it would stand down 6,000 workers and could permanently close more than a third of its stores around the world. Premier Investments, whose brands include Peter Alexander, Just Jeans and Portmans,, will close all of its retail stores until April 22, leaving more than 9,000 employees without a pay packet. Accent Group, which owns Athlete’s Foot and Timberlands, will close its outlets for four weeks. Lovisa will close its jewellery stores and defer its up-coming dividend. JB Hi-Fi will close its New Zealand stores for at least four weeks. Super Retail Group cancelled its dividend.
With its eye always on the bottom line, the market rewarded some of those companies for their response to these unprecedented conditions. Accent Group gained 1.6 per cent, Lovisa 27.6 per cent, JB Hi-Fi 3.8 per cent and Super Retail Group 7.8 per cent. Premier Investments eased 0.7 per cent. Flight Centre shares were suspended awaiting further news.
Despite the carnage on main street, nine out of eleven industry sectors advanced this morning., led by gains in tech and health stocks. Rumours of Afterpay’s death appear to have been exaggerated as the Millennial favourite climbed 17.4 per cent. The buy-now-pay-later leader has more than doubled in value since Monday’s close, but trades at less than half of its capitalisation before the pandemic. WiseTech rose 6.3 per cent, Altium 3.9 per cent and Nextdc 5.3 per cent.
The health sector has weathered the storm better than most, today rising 4 per cent to its highest point in more than a week. Avita Medical put on 17.9 per cent, Sonic Healthcare 8.6 per cent and CSL 3.7 per cent. Cochlear was flat after raising $880 million in an institutional placement.
The mining majors were mixed. Rio Tinto gained 4.3 per cent, while BHP eased 1.9 per cent. Among the banks, CBA shed 1.9 per cent, ANZ 0.9 per cent, NAB 0.2 per cent and Westpac 0.8 per cent.
A downbeat morning on Asian markets saw China’s Shanghai Composite fall 0.6 per cent, Hong Kong’s Hang Seng 1.1 per cent and Japan’s Nikkei 4.2 per cent.
Brent crude faded seven cents or 0.3 per cent this morning to $US27.32 a barrel. Gold dipped $3.80 or 0.2 per cent to $US1,629.60 an ounce.
The dollar’s wild ride continued. After bouncing five cents in a matter of days, the Aussie slumped 1.2 per cent this morning to 58.86 US cents.
What’s hot today and what’s not:
Hot today: Analysts have been picking through the wreckage for recovery stories. Star Entertainment Group (ASX:SGR) rebounded from yesterday’s record low following broker upgrades from Credit Suisse and Citi Research. The casino group was among the best performers on the index, jumping 16.1 per cent. Credit Suisse raised it to a ‘Buy’, based on its expectation of a one-month shutdown, followed by a steady improvement in volumes.
Not today: With gold at a record high this week in Australian dollars, local miners have been viewed as havens from the destruction in the broader market. However, no company is immune from the impact of community lockdowns and border closures. Northern Star (ASX:NST) this morning withdrew its production and cost guidance, citing disruptions to operations caused by the virus. The company deferred its interim dividend to preserve cash while the pandemic plays out. Shares slumped 11.6 per cent.