The Australian share market rollercoaster ride took another hard turn on Thursday following an unscheduled rate cut from the Reserve Bank of Australia (RBA).
The emergency meeting held this afternoon witnessed the Reserve Bank of Australia (RBA) making history, after cutting its cash rate for the second time in a month.
As widely expected, the RBA cut its cash rate by a further 25 basis points after already doing so at its regular meeting at the beginning of the month of March.
Thursday’s cut takes the cash rate to 0.25% and potentially, for now, is the RBA’s last cut for the meantime having recently flagged that it would not lower the cash rate below this threshold.
Along with the cash rate lowered, the Reserve Bank is providing a three-year funding facility of up to $90 billion at 0.25% interest to banks provided they lend cash to small and medium-sized businesses.
Elsewhere, the Commonwealth Bank was the first of the “Fab Four” (banks) to react, revealing it would not cut standard variable mortgage rates in response to the Reserve Bank’s move.
Despite the RBA’s emergency rate cut, the benchmark S&P/ASX 200 Index finished down -170.3 points, or -3.44%, to 4,782.9, leaving the benchmark -34% below its 7,197, February 20 high, after posting an intraday low at 4,741, last seen back in 2016.
Finance stocks were among the worst performers, with the ANZ bank shares falling -10.76% to $15.10, while Westpac plummeted -9.76% to $14.80, with the National Australia Bank dropping -9.46% to $14.87, and the Commonwealth Bank fell -7.11% to close at $61.01.
Elsewhere, Flight Centre’s shares nose-dived another -33% to $9.91 before the company entered a trading halt pending a further announcement. Webjet also suspended trade in its shares ahead of an update from the company.
Over the past month, shares in Flight Centre and Webjet have lost a whopping -74.3% and -70.5% of their value respectively.
With aircraft fleets grounded across the world and demand for other transport services expected to fall, the collapse in oil prices escalated overnight.
The price of U.S. West Texas Intermediate dropped near its lowest level since 2002 of $20.45 a barrel which added additional pressure on local oil and gas producers.
Among the major energy companies, Worley dropped -7.9% to $5.11, while Santos lost -12.23% to close at $2.80, and Oil Search ended the day down -17.74% to $2.04.
Mirvac’s shares dropped -18.03% to close at $1.71, while shares in Stockland fell sharply to $2.09, plummeting -25.62%.
Meanwhile, our big supermarkets share climb as continuing demand from panic-buying lifts Woolworths by +0.76% to $39.90, while Coles rose +1.65% to a new all-time high at $17.25. Metcash continued its rally and gained +3.83% as it reached its highest close since May 2018 at $3.25.
Meanwhile, non-essential retailers Myer slumped -44.12% t0 $0.095 and Lovisa -43.81% to $2.45.
As for the Australian Dollar, the bears continue to weigh their paws on the local currency as the downward spiral, witnessed prices hitting a fresh near-18-year low of US$0.5507 before rebounding, and is currently buying US$0.5708 (as of writing).