Battered Wall Street post best day in years after Dow’s best day since 1933 – ASX expected to surge

March 25, 2020 - 1 week ago
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“Is that light at the end of the tunnel”, (you may ask?).

After a turmoil start to the week, the ASX bulls may now have found a potential base (support) from the November 2012 lows after rebounding from Tuesday’s intraday low at 4,402.5.

Overnight, all three of the major U.S. stock market indices jumped significantly higher on hopes that trillions of dollars in stimulus spending by governments around the world will be enough to offset the economic damage wrought by the COVID-19 pandemic.

In New York, the Dow Jones Industrial Average surged +2112.98 points or +11.4%, on an epic “Turnaround Tuesday”, notching its biggest one-day percentage gain since 1933.

Meanwhile, the S&P 500 advanced +9.38%, its best day since October 2008; the Nasdaq ended up +8.12%, as investors anxiously awaited a sweeping coronavirus economic relief package that’s in its final stages of approval.

Democrats and Republicans said they were closing in on a massive stimulus package to combat the economic impact of the coronavirus. However, talks continued with no word of a deal by late Tuesday afternoon.

President Donald Trump, describing the proposal as a $2 trillion package, said Tuesday that “we are working to pass the biggest and boldest financial relief package in American history.”

Democrat House Speaker Nancy Pelosi said that there was “real optimism” that a deal could be reached in the next few hours.

Later, Senate Majority Leader Chuck Schumer said that talks were on the 2-yard-line.

The agreement is expected to cushion American workers and businesses from job losses and an anticipated collapse in economic activity from lockdowns triggered by the virus.

Market bulls were encouraged by signs President Donald Trump wants to re-open the economy as soon as possible. “I would love to have it open by Easter,” Trump told reporters.

At the New York close, the Australian index futures (SPI 200 futures) were up +278 rise or +5.9%; meanwhile, the Australian Dollar, our local currency is currently buying US$0.5980 (as of writing).

Daily outlook on the benchmark S&P/ASX 200

Yesterday, the ASX 200 kicked off to a brighter start after Monday’s tumble, the battered and bruised index closed at its lowest level since late November 2012 at 4,402.5.

With the help of the U.S. Federal Reserve announcement overnight that it would take additional aggressive action, including buying an unlimited amount of Treasury bonds, the Australian share market has managed to hold to a decisive run on Tuesday and sustained the rebound from the near eight-year lows as gains in the Gold, Energy and A-REITs sectors led the index higher.

The benchmark S&P/ASX 200 rallied +122 points in the final half-hour of trade to close the Tuesday session up +189.7 points, or +4.17%, at 4,735.7, while the All Ordinaries index climbed +189.2 points, or +4.15%, to 4,753.3.

The gold miner’s shares were mixed considering spot gold significant rally in the last 48 hours has now posted an intraday high of $US1,612 an ounce (after the daily session close).

Newcrest Mining rose +6.5% to $24.21, while Gold Road Resources jumped +17.37% to $1.25 and Northern Star Resources gained +18.32% to $12.98.

In the mining sector, BHP shares closed +4.74% higher at $28.31, while Rio Tinto rose +1.07% to $79.55 after announcing it would slow operations in Canada and halt some in South Africa because of coronavirus shutdowns. Fortescue Metals Group managed a +1.88% gain to end the day at $9.73.

The “Fab Four” (banks) were also up, with CBA gaining +5.05% to $57.00, with NAB rising +3.75% to $14.40, ANZ gained +5.32% to $14.85, and Westpac was up +2.91% to $14.51.

Energy gained the most, +7.63%, as the price of West Texas Intermediate (WTI) surged +15% on Monday.

Santos surged +18.84% to $3.47, with Woodside climbed +5.96% to $16.18 and Oil Search gained +6.88% to $2.02 and Caltex recovered +7.95% to $20.51.

Real estate was the second-biggest gainer, rising +7.53% as Goodman Group climbed +3.54%, Dexus rose +4.73%, and Stockland gained 3.85%.

The significant gains were posted by Afterpay, which surged +25.96% to $11.21, WiseTech Global, which advanced +13.9% to $13.67, and Xero rose +7.4% to $63.09.

As for the discretionary stocks, who were yesterday’s anchors, Aristocrat Leisure gained +8.20% to $16.89, Tabcorp +6.82% to $2.35 and Crown rose +5.23% to $6.44.

Woolworths slipped -0.74% to $36.18 after it said venue closures, and changes to shopping behaviour at its supermarkets, meant it could not estimate the impact of the virus on its full-year financial results, while Wesfarmers rose +2.13% to $31.68.

Consumer debt company Credit Corp Group soured +45.92% to $9.12, although that still leaves it down -70% on the year.

Seven West Media gained +1.52% to +0.067 after it said the postponing of the Olympics and AFL competition, along with a falling advertising market, means it must scrap its earnings guidance.

Michael Hill Jeweller plummeted -14.55% to $0.235 after it postponed its interim dividend payment of 1.5 cents per share for six months.

Retail Food Group fell -8.57% to $0.032 after the company, which runs Gloria Jeans cafes, Donut King, Crust pizza outlets, scrapped its guidance but noted good sales at some stores.

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