A Trump-inspired stampede into oil stocks eased by mid-session but helped keep the ASX on track for a second straight winning week.
The ASX 200 edged up 18 points or 0.4 per cent at the end of a stop-start week when the local market moved in a different direction each session. Some heavy lifting on Monday set up the index for a winning week despite setbacks on Tuesday and Thursday. Today’s advance clawed back a fraction of yesterday’s 104-point fall, extending the tally for the week beyond 330 points .
The energy sector provided much of the momentum after hints of a breakthrough in the oil price war sparked a record night on crude markets. Local producers briefly recorded double-digit gains after US President Donald Trump said he expected Saudi Arabia and Russia to cut production by up to 15 million barrels a day. The news sent Brent crude up 21 per cent to US$29.94 a barrel. The US benchmark went better still, surging 24.7 per cent.
The local energy sector climbed to its highest level in almost three weeks before slashing its rally by more than half. Oil Search led the charge with a rise of 8.1 per cent. Santos put on 6.6 per cent, energy engineering company Worley 7.6 per cent, Beach Energy 2.9 per cent and Woodside 2.8 per cent.
A little of the shine came off the oil rally after Russia and Saudi Arabia downplayed Trump’s claims. Brent crude eased 68 cents or 2.2 per cent this morning to $US29.29 a barrel.
The ASX 200 surged as much as 93 points or 1.8 per cent in early trade before the “Friday rot” set in. Investors have been reluctant to hold trades into the weekend at a time when the flow of news has been relentlessly negative. Overnight, the S&P 500 in the US climbed 56 points or 2.28 per cent, setting up our market’s bright start. S&P 500 index futures drifted lower this morning, recently down 16 points or 0.6 per cent.
A mixed local market saw gains in resource and tech stocks offset by declines in the consumer discretionary sector, industrials, health and bank stocks. Rio Tinto kicked up 3.5 per cent to its highest level in almost a month. BHP put on 3.3 per cent, Fortescue 6.3 per cent and Newcrest 1.6 per cent. Computershare climbed 4 per cent, Nextdc 2.8 per cent and Afterpay 1.1 per cent.
At the other end of the index, JB Hi-Fi shed 7.8 per cent, casino group SkyCity Entertainment 6.5 per cent and AMP 5.3 per cent. Property groups Mirvac and Stockland gave up 5.2 per cent and 4.9 per cent, respectively.
Commonwealth Bank was once again the pick of the big four, with a drop of 0.2 per cent. ANZ fell 0.7 per cent, NAB 0.5 per cent and Westpac 1 per cent. Macquarie slipped 0.1 per cent.
March economic data confirmed the damage caused by the Covid-19 pandemic. A Commonwealth Bank-Markit index of services activity plunged at the fastest pace on record. The services PMI tanked 10.5 points to 38.5. The already-weak AIG Construction Index slumped to 37.9 from a February reading of 42.7. The February retail sales report has been rendered irrelevant by succeeding events, but showed a 0.5 per cent improvement in sales before virus lockdowns commenced.
A mixed morning in Asia saw China’s Shanghai Composite down 0.2 per cent, Hong Kong’s Hang Seng off 0.6 per cent and Japan’s Nikkei ahead 0.7 per cent.
Gold dipped $3.30 or 0.2 per cent to $US1,634.40 an ounce.
The dollar eased less than 0.1 per cent to 60.56 US cents.
What’s hot today and what’s not:
Hot today: The pandemic continues to provide breath-taking profits for shareholders in companies that find a way to profit from the crisis. Skin Elements (ASX:SKN) doubled its market capitalisation this morning after announcing plans to launch a hand sanitiser with Holista Colltech (ASX:HCT). The sanitiser will use the Path-Away active ingredient licensed from the US by Holista. Shares in Skin Elements were last up 108 per cent. HCT shares climbed 19 per cent.
Not today: SkyCity Entertainment (SX:SKC) pared a week-long recovery this morning after updating the market on the impact of the virus lockdown. The group’s five casinos in Adelaide, Auckland, Queenstown (two) and Hamilton are all closed, along with hotels, restaurants, bars and attractions. The company estimates it is missing out on $90 million a month in revenue. Cost-cutting efforts include the departure of the Chief Property Officer, a 50 per cent cut in director fees, executive salary cuts of 20 -40 per cent and the standing down of 90 per cent of Australian staff. The share price dropped 6.5 per cent.