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Aussie stocks entered bear market territory before a bounce in oil and the promise of a US stimulus package helped the local index turn positive.
The ASX 200 plunged 222 points in the opening minutes to its lowest level since December 2018, then mounted its first serious rebound in more than a week. By mid-session, the benchmark index had compiled a gain of 44 points or 0.8 per cent.
Bargain-hunters jumped in at the morning’s lows after President Donald Trump announced a press conference tonight to outline a stimulus plan. The president said he will ask Congress to approve “very substantial” payroll tax relief for workers. Details of an Australian package are expected later this week.
US stock index futures ripped higher. S&P 500 index futures were recently ahead 68 points or 2.5 per cent. Dow futures climbed 589 points or 2.5 per cent.
At this morning’s low, the ASX 200 was 1,624 points or 22.7 per cent off its February peak. The index would have to close below 5730 to satisfy the technical definition of a bear market. The most recent trade was at 5803.
Battered energy stocks led the turnaround. The sector, which tumbled 20 per cent yesterday as oil crashed, today clawed back 4.7 per cent. Beach Energy rallied 7.1 per cent, Woodside 6.7 per cent , Santos 4.7 per cent and Oil Search 4.2 per cent. The gains came as Brent crude bounced $2.03 or 5.9 per cent this morning to $US36.37 a barrel. Overnight, the international benchmark tumbled $10.01 or 24.1 per cent, its worst fall since the 1991 Gulf War.
The volatile tech sector bounced off a 13-monthlow as Nearmap gained 7.3 per cent, Appen 5.9 per cent and Afterpay 5.5 per cent. The Small Ords index of small caps put on 1.7 per cent.
The big four banks hit fresh multi-year losses before staging a recovery. CBA was lately up 0.6 per cent, ANZ 0.5 per cent and NAB 0.5 per cent. Westpac edged up 0.1 per cent. Among mining majors, BHP put on 2.1 per cent, Rio Tinto 1.1 per cent and Fortescue 4.7 per cent.
The session brought temporary relief for investors in some of the stocks most exposed to the economic impact of the Covid-19 virus. Webjet rose 9.4 per cent, Harvey Norman 3.9 per cent, Qantas 10.4 per cent and Flight Centre 3.8 per cent.
Defensive stocks trailled the broader market. The gold index fell 1.8 per cent and utilities 1.4 per cent. Consumer staples inched up a tepid 0.4 per cent.
Business and consumer confidence slumped last month as the virus epidemic compounded already-weak sentiment after a summer of bushfires and floods. NAB’s business confidence gauge plunged to -4 from -1 as conditions deteriorated. A weekly measure of consumer confidence sagged 4.2 per cent.
Asian markets were mixed. China’s Shanghai Composite bounced 0.37 per cent and Hong Kong’s Hang Seng 0.94 per cent. Japan’s Nikkei trimmed heavy early losses to lately be off 0.24 per cent.
Gold faded $7.60 or 0.5 per cent to $US1,668 an ounce.
The dollar eased less than 0.1 per cent to 65.83 US cents.
What’s hot today and what’s not:
Hot today: Biotech Mesoblast (ASX:MSB) surged almost 20 per cent after announcing plans to evaluate a potential treatment for the deadly effects of the Covid-19 virus. The Victorian company aims to trial its Remestemcell-L product for efficacy against acute respiratory distress syndrome (ARDS) caused by the virus. ARDS is the principal cause of death among those infected by the virus. The share price was lately up 27.3 per cent.
Not today: Debt becomes a dirty word when financial markets sour. A managed investment scheme offering exposure to “global private debt investments” may have sounded attractive when it floated back in September, but the Partners Global Income Fund (ASX:PGG) hit a new low this morning. Shares that floated at $2 hit $1.61 this morning, well below the company’s estimated net asset value of $2.01 in its latest update.
