ASX resumes another turbulent week as Australia begins shutdown

March 23, 2020 - 2 weeks ago
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As the financial markets brace for another whirlwind of market volatility, Australian states move to a shutdown of more businesses, with only those deemed as essential services allowed to remain open in an attempt to halt the spread of the deadly coronavirus.

On Sunday evening, PM Scott Morrison listed the places he said would need to close from midday Monday as part of the government’s emergency response.

Pubs and clubs – In NSW and Victoria from Monday registered and licenced clubs, licenced premises in hotels and pubs, casinos and night clubs will all be closed.

Cinemas and entertainment venues – Closed in NSW and Victoria from midday Monday.

Restaurants and cafes – Delivery and takeaway only in NSW and Victoria.

Gyms and indoor sporting venues – Closed from Monday midday in NSW and Victoria.

Places of worship will also be shut down., with religious gatherings and funerals to be suspended, unless only a very small group is involved and the one person per four square metres rule can be followed.

Weddings and funerals – Not allowed in Victoria from Monday.

Schools – Victoria brings forward school holidays from the end of Monday until April 13. NSW advises parents to keep children home, but schools remain open if parents need to work.

Supermarkets and shopping centres – Shops remain open, including bottle shops, but people are being told not to congregate there, i.e. in food courts.

The New South Wales government will put a full list of what is open and closed on nsw.gov.au

This is stage 1- to be reviewed monthly.

News sources reported that the number of cases in Australia has risen sharply in recent days, reaching 1,315.

New South Wales (NSW), home to Sydney, is the worst-affected state with 533 confirmed cases. Victoria, of which Melbourne is the capital, has 296 cases, while Queensland has 259.

The U.S. markets wrapped up one of the most turbulence weeks Friday after the “circuit breaker” was triggered twice in the past five trading days.

Trading was halted for 15 minutes both on Monday and Wednesday last week as a key circuit breaker was triggered after the benchmark S&P 500 declined by 7%.

The Dow Jones Industrial Average Index, S&P 500 Index and Nasdaq Composite Index plummeted -17.3%, -14.98% and -12.64%, respectively, marking the most profound weekly fall since 2008.

The SPI 200 futures closed at 4,708 and points to a -87 points, or -1.8% fall, at the opening bell.

As for the Australian Dollar, our local currency is currently buying US$0.5716 (as of writing).

Daily outlook on the benchmark S&P/ASX 200

As the bearish tones echo on into a new week, the Australian share market finished last Friday’s session on its worst week since October 2008, as uncertainty over the economic effects of the coronavirus inflicts havoc across the global markets.

Despite the modest gains, the benchmark S&P/ASX 200 Index still dropped -798 points, or -14.41%, (high-low of the last five trading days) and wiped out a whopping $703.3 billion off the boards in the previous four weeks.

In Friday’s action, the benchmark S&P/ASX200 finished the session up +33.7 points, or +0.7%, at 4,816.6, while the broader All Ordinaries index gained +44.9 points, or +0.93%, to 4,854.3.

The ASX 200 had many twists, turns, dives and jumps last week, as it dodged many challenging events.

With the “global central banks” being the key event, (in no order), the U.S. Federal Reserve, the European Central Bank (ECB), the Reserve Bank of New Zealand, Bank of England all cut rates.

Back home, the Reserve Bank of Australia (RBA) held an unscheduled emergency meeting on Thursday and cut its cash rate for the second time in a month to 0.25% and 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.

Out of the major banks, only the ANZ was the only bank to pass on the RBA rate cut to its variable mortgage customers; however, all Fab Four” (banks) cut fixed-rate mortgage rates.

Three of the “Fab Four (banks) gained on Friday, after falling to their lowest levels in decades over the past couple weeks.

The ANZ finished up +6.8% to $16.02, while NAB rose +7.5% to $15.66 and Westpac gained +8.5% to $15.77.

Commonwealth Bank – which has not suffered as steep losses as the other three – fell -1.7% to $59.91.

CSL was also a significant weight on the index, declining -13.9% to $270.15.

Property trusts were the biggest risers on Friday, jointly up +8.9% after the sector suffered a massive -43.9% plunge over the previous 11 sessions.

For the week, Transurban plummeted -20.9% to $10.30, Scentre Group nosed-dived -37.1% to $1.63, Goodman Group lost -16.8% to $11.45, Stockland dropped -46% to $2.15, Mirvac Group slid -27.6% to $1.96 and GPT Group fell -34.2% to $3.37.

Companies exposed to the aviation and tourism sector also felt the heat from the bears as governments worldwide adopted strict border control measures, and airlines slashed flights.

Flight Centre tumbled a whopping -48.3% to $9.91, Corporate Travel Management fell -41.7% to $5.39, while Qantas dived -25.8% to $2.36 and Virgin Australian fell -30.4% to $0.055.

Meanwhile, Crown Resorts fell -25.4% to $6.12, Star Entertainment Group dropped -38.6% to $1.62, and gaming machine manufacturer Aristocrat Leisure tumbled -35.7% to $17.94.

The energy sector gained +4.5% as the price of oil surged +24% on Thursday displaying its biggest one-day gain on record, as it recoups back more than half of the losses witnessed on Wednesday.

The rebound was on the heels of three straight days of selling, including Wednesday’s -24% plunge that took (WTI) to the lows posted back in 2002 at $20.45. It was WTI’s third-worst day on record.

Santos climbed +10.9% to $3.05 and Oil Search was up +15.3% to $2.34, while Woodside Petroleum rose +0.6% to $16.

Woolworths dropped -6.1% to $37.47, Wesfarmers fell -4.6% to $33.28 and CSL dropped -4.6% to $270.88.

Telstra fell -6.1% to $3.07 after announcing it was freezing its job-cutting program for six months, suspending late payment fees and disconnections and inviting stood-down Qantas employees to apply for 1,000 temporary jobs to help virus-proof the economy.

Afterpay shares went on a wild roller-coaster ride through the week as the buy now, pay later provider managed to display a strong rally and climbed +25.7% on Friday, its shares closed the week -45.5% lower at $12.67.

Major miners were firmer through the week despite base metal prices falling. Fortescue Metals Group rose +5.9% to $10.52, BHP Group climbed +1.8% to $27.19 and Rio Tinto added +0.8% to $81.70.

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