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A tentative week-long share market recovery stuttered after Wall Street bellyflopped into a new quarter.

The ASX 200 briefly erased all of yesterday’s 182-point rally before fighting back to reach mid-session 143 points or 2.7 per cent in the red. The setback dented a 713-point rebound since last Monday’s seven-year closing low.  

US stocks had been leading the global recovery, but turned sharply lower after President Donald Trump warned the nation to prepare for a “very, very painful two weeks” as the death toll from the Covid-19 pandemic mounts. The S&P 500 slumped 114 points or 4.41 per cent. The Dow briefly shed 1,100 points before trimming its loss to 974 points or 4.44 per cent.  

The steady drip of bad news continued this morning. Commonwealth Bank warned the pandemic could throw more than half a million Australians out of work over the next three months as the economy shrinks by up to 7.5 per cent. Thorn Group became the latest retailer to shut up shop, announcing it will temporarily close its 62 Radio Rental stores until further notice. The stores employ more than 500 people. Builder Adelaide Brighton joined the long list of companies dumping earnings guidance in the face of an uncertain outlook.

A survey of first-quarter business conditions and confidence showed both fell away sharply as the pandemic took hold. Business conditions fell nine points to -3 and confidence nine points to -11.

“While the bulk of the survey was collected prior to the introduction of the more significant containment measures, the spread of the coronavirus and international developments has clearly impacted confidence,”  Alan Oster, NAB Group Chief Economist, said. “Business conditions were also weaker – and this was before activity saw a significant disruption”.

The big four banks were hammered after New Zealand’s central bank banned its banks from paying out dividends to their listed Australian parent companies. The suspension of dividends followed a similar move in the UK, sharpening fears that the Reserve Bank of Australia may soon follow. CBA dropped 4.2 per cent, ANZ 5.7 per cent, NAB 5.4 per cent and Westpac 4.2 per cent.

The big end of the market bore the brunt of the selling, with the S&P/ASX 200 falling 2.4 per cent, versus a 1.5 per cent decline in the Small Ordinaries.

Traders locked in profits on some of the best rebound plays of the last week. Fund managers Challenger and Magellan slumped 9.7 per cent and 8.9 per cent, respectively. Sydney Airport shed 8.1 per cent, Mayne Pharmaceutical 7.5 per cent and real estate advertiser Domain 6.5 per cent.

Energy stocks bucked the downtrend, climbing for the seventh time in eight sessions after President Trump told reporters he believed Saudi Arabia and Russia would resolve a damaging dispute that has crippled oil markets. Trump said, “I have confidence in both that they’ll be able to work it out.” The news helped lift  Brent crude 75 cents or 3 per cent this morning to $US25.49 a barrel. Cooper Energy climbed 4.5 per cent, Santos 2.8 per cent and Woodside 0.1 per cent.

China’s Shanghai Composite fell 0.2 per cent, Hong Kong’s Hang Seng 1.2 per cent and Japan’s Nikkei 1.7 per cent. S&P 500 index futures were recently ahead 19 points or 0.9 per cent.

Gold bounced $5.80 or 0.4 per cent to $US1,597.20 an ounce.

The dollar edged up 0.1  per cent to 60.76 US cents.

What’s hot today and what’s not:

Hot today: With balance sheets under intense scrutiny, companies are experiencing wildly varying reactions to future-proofing by raising capital. Shares in IDP Education (ASX:IEL) jumped 26.2 per cent this morning after the international languages educator raised $225 million. The share price hit $15.66, a significant premium to the placement price of $10.65. Online travel agent Webjet (ASX:WEB) surged 15 per cent after raising $231 million. Retailer Kathmandu (ASX:KMD), on the other hand, shed 36.6 per cent in New Zealand. The company’s Australian listing is not due to resume trade until tomorrow.

Not today: Qantas (ASX:QAN) has been one of the strongest recovery stories over the last week and a half, rebounding from a five-year low of $2.02 two weeks ago to a close of $3.38 yesterday. The rebound stalled today after Credit Suisse downgraded the airline to “underperform” from “neutral”. The broker’s analysts think the pandemic will depress air travel for years to come, with a full recovery unlikely until 2023. Qantas shares dipped 5.3 per cent to $3.20.

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