Australian shares climb after gains on Wall Street
Australian stocks were higher at closing time spurred by hope that governments will follow the lead of central banks and respond to the coronavirus with stimulus packages.
Economy
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The Australian Stock Exchange has closed higher on a swell of optimism that global stimulus measures will buffer economies from the impact of the coronavirus.
The benchmark S&P/ASX200 finished up 70.3 points, 1.11 per cent, at 6,395.7, while the broader All Ordinaries index closed up 73.9 points, or 1.15 per cent, to 6,472.4.
The Australian dollar was buying 66.21 US cents, up from 65.97 US cents as the market closed.
Earlier, NAB senior economist David de Garis said the markets were driven by hope that governments will follow the lead of central banks and respond to the coronavirus emergency with stimulus packages to protect their economies.
“Australia and the UK have both said details will be available soon – two currencies showing gains today – whereas Europe is a little more cagey, with the Euro losing ground,” he said.
Morningstar says former US vice president Joe Biden’s strong showing in the Super Tuesday Democratic primary contests injected a dose of confidence into Wall Street.
Local investors will be watching to see international trade in goods and services data for January on Thursday (US time).
WALL STREET REBOUNDS
Meanwhile, Wall Street roared back to life with both the Dow and S&P 500 surging more than 4 per cent after former Vice President Joe Biden’s strong showing in the Super Tuesday Democratic primary contests.
Biden’s pack-leading results – on course to win in 10 of the 14 states that held primaries on Tuesday – powered a jump in healthcare stocks and upbeat economic data soothed worries about the coronavirus outbreak.
After the S&P 500 reached an all-time high on February 19, the stock market slid into a correction on Wednesday (US time) as the rapidly spreading Covid-19 sparked recession fears.
The S&P 500 has recovered nearly 6 per cent from Friday’s closing trough but remains about 7.6 per cent below the all-time high reached on February 19.
The S&P 500 healthcare index had its best day since November 2008, advancing 5.8 per cent. Health insurers, in particular, gained ground, with the S&P 500 Managed Care index jumping 12.4 per cent.
Biden emerged as frontrunner in a narrowing race for the Democratic presidential nomination following a string of primary victories, providing relief to market participants wary of the more progressive rival Bernie Sanders. Sanders’ embrace of a Medicare for All healthcare policy that would essentially abolish private insurance had cast a shadow on healthcare stocks. “It’s a relief to the market that it appears that Joe Biden is increasingly likely to get the Democratic nomination,” said Oliver Pursche, vice chairman and chief market strategist at Bruderman Asset Management in New York.
“Many Americans, even those inclined to agree with Trump’s policies, are clamouring for a unifying voice,” Pursche added.
“And Joe Biden is about as benign as anyone can be.”
Biden’s showing acted as a balm after the market slumped following the US Federal Reserve’s emergency 50-basis-point interest rate cut to head off potential economic damage from the coronavirus.
The rally’s momentum accelerated around midday after House and Senate leadership reached a deal on a bipartisan $8.3 billion ($A12.5 billion) bill to battle the coronavirus outbreak.
The House was set to vote on the measure later Wednesday (US time).
Senate leaders were pressing for a vote in that chamber by the end of the week.
The measure’s funds would go toward research into a vaccine, improved tests and drugs to treat infected people.
Separate data released showed stronger than expected private sector hiring, while the services sector expanded at its fastest pace in a year.
Additionally, the Mortgage Bankers Association reported the average 30-year fixed contract mortgage rate fell last week to a seven-year low.
The Dow Jones Industrial Average rose 1,173.45 points, or 4.53 per cent, to 27,090.86, the S&P 500 gained 126.75 points, or 4.22 per cent, to 3,130.12 and the Nasdaq Composite added 334.00 points, or 3.85 per cent to 9,018.09.
All of the 11 major sectors in the S&P 500 posted solid advances, led by healthcare and utilities.
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Dollar Tree Inc forecast underwhelming first-quarter sales and profit, sending the discount retailer’s shares down 3.6 per cent.
Abercrombie & Fitch Co jumped 9.0 per cent.
Campbell Soup Co’s beat-and-raise earnings report gave a 10.1 per cent boost.
Advancing issues outnumbered declining ones on the NOSE by a 5.34-to-1 ratio; on Nasdaq, a 3.64-to-1 ratio favoured advancers.
The S&P 500 posted eight new 52-week highs and 31 new lows; the Nasdaq Composite recorded 37 new highs and 130 new lows.
Volume on US exchanges was 11.04 billion shares, compared with the 10.00 billion average over the last 20 trading days.
Originally published as Australian shares climb after gains on Wall Street