Australian share market closes higher after early losses, Wall Street expected to fall

Australian shares have closed higher today despite Westpac reporting a slump in earnings, with US stocks likely to fall when the market opens.

The Australian share market has demonstrated its resilience, reversing its early losses of as much as 1.4 per cent to finish higher by a similar amount and start the week off on a positive note.

After being down 76.3 points early, the S&P/ASX200 benchmark index closed Monday up 73.9, or 1.41 per cent, at 5,319.8 points, while the All Ordinaries index finished 64.5 points higher, or 1.21 per cent, at 5,389.5 points. “It was a nice little turnaround,” said the Australian Stock Report senior advisor Ben Le Brun.

The early losses came after Friday’s 5.0 per cent, 276-point selloff, the market’s worst day in five weeks.

“A lot of participants would have thought the writing was on the wall, that we could be heading back to 5,000,” Mr Le Brun said.

“But once again, we’ve seen a little bit of starch in the collar, a willingness to buy at this level.”

The gains came even as US futures - which in recent days have played an outsize influence on Australian market performance - were pointing to losses of around 0.8 per cent on Wall Street on Monday.

“A terrific performance from our market, and we might be looking at a decoupling from the US, because we’re looking at reopening and having successfully navigated the coronavirus,” Mr Le Brun said.

The Australian share market has demonstrated its resilience, reversing its early losses of as much as 1.4 per cent to finish higher. Picture: AAP

The gains also came despite Westpac joining rival ANZ in deferring an interim dividend to shareholders, after Westpac’s first-half cash earnings dropped 70 per cent to $993 million.

Still shares in Australia’s oldest bank gained 2.8 per cent to $15.77, while ANZ rose 2.5 per cent to $16.15, NAB climbed 2.0 per cent to $16.46 and CBA gained 1.8 per cent to $59.88.

Elsewhere in the financial sector, IAG said there was “limited scope” to pay a final dividend in September, although it would not make a decision until August. IAG shares were down 2.1 per cent to $5.48 and rival QBE’s shares dropped 2.2 per cent, although Suncorp rose 1.3 per cent to $8.64.

Meanwhile Afterpay shares rocketed up 23.8 per cent to $36.10 after Chinese tech giant Tencent Holdings announced it had accrued a five per cent stake in the company in purchases since late March.

Buy now pay later competitor Openpay gained 15.2 per cent, Zip Co climbed 5.9 per cent, Sezzle rose 9.9 per cent and Humm owner Flexigroup rose 2.9 per cent, although Splitit dropped 5.1 per cent.

Goldminers also shone as the price of the precious metal climbed back up above $US1,700 an ounce, with Newcrest rising 6.6 per cent, Evolution gaining 7.0 per cent and Northern Star advancing 5.9 per cent.

Diversified miners were more subdued, with BHP up 0.1 per cent to $29.88, Rio Tinto down 1.6 per cent to $81.30 and Fortescue Metals falling 1.7 per cent to $10.79.

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Logistics company Qube rose 17.7 per cent to $2.56 after completing a $264 million institutional entitlement offer to support new growth initiatives. Energy stocks were the only sector to lose ground, falling 0.1 per cent as crude prices dropped nearly two per cent, with Woodside down 0.8 per cent to $20.96. Among blue chip stocks, CSL rose 2.9 per cent to $307.38, Telstra gained 3.0 per cent to $3.08 and Woolworths rose 2.3 per cent to $35.25.

Meanwhile one Australian dollar was buying 63.83 US cents, down from 64.60 US cents at Friday’s close.

JOB ADS PLUNGE IN APRIL: ANZ

Job advertisements suffered their largest ever fall in April as strict social distancing rules and business closures to combat the coronavirus all but crushed demand for labour.

Figures from ANZ showed total job ads plunged 53.1 per cent in April, compared to a 10 per cent drop in March.

The fall is almost five times larger than the previous record of 11.3 per cent in January 2009.

Job ads averaged just 63,806 in April, down from 136,106 in March and 62.2 per cent lower from a year ago.

Economists fear unemployment could spike toward 10 per cent in coming months as large chunks of the economy were shut to fight the virus.

The jobless rate stood at 5.2 per cent in March but the survey was taken early in the month before the lockdown took full effect.

Figures from ANZ showed total job ads plunged 53.1 per cent in April, compared to a 10 per cent drop in March. Picture: AFP

ANZ senior economist Catherine Birch said the government’s JobKeeper payment plan to keep people in work could temper the rise in unemployment to around 9.5 per cent, but there would still be substantial loss of employment, hours worked and household income over the coming months.

The ANZ vacancies series is closely watched by the Reserve Bank of Australia (RBA) given it counts actual job ads, while Australian Bureau of Statistics data is based on intentions by firms to hire.

The RBA has slashed rates to a record low of 0.25 per cent and launched a massive bond buying programme to cushion the economy from the impact of the pandemic.

The central bank holds its May policy meeting on Tuesday and is widely expected to hold rates as it gauges the effect of its latest easing measures.

BUFFET DUMPS SHARES IN AIRLINES

Billionaire investor Warren Buffett says the United States’ has the capacity to withstand crises like coronavirus but he acknowledges the global pandemic could significantly damage the economy and his investments.

The 89-year-old opened Berkshire Hathaway’s AGM with lengthy remarks to soothe anxious investors, urging them to stay committed to stocks despite this year’s bear market, even if the pandemic gets a second wind late this year.

He said Americans persevered and prospered through such crises as the Civil War in the 1860s, the influenza pandemic a century ago and the Great Depression. “Nothing can stop America when you get right down to it,” Buffett said.

“I will bet on America the rest of my life.”

Warren Buffett, CEO of Berkshire Hathaway which has reported first-quarter net losses of nearly $US50 billion Picture: AFP

The meeting was held virtually for the first time, without shareholders in attendance, and streamed from Omaha, Nebraska by Yahoo Finance.

Over more than 4-1/2 hours Buffett said his conglomerate has taken many steps responding to the pandemic, including providing cash to struggling operating units, and throwing in the total on a multibillion-dollar bet on US airlines.

The meeting began several hours after Berkshire reported a record $49.75 billion first-quarter net loss, reflecting huge unrealised losses on common stock holdings such as Bank of America Corp and Apple Inc.

Berkshire’s cash stake ended the quarter at a record $137.3 billion, though Buffett said “we’re willing to do something very big,” perhaps a $30 billion to $50 billion transaction.

But it won’t be in US airlines, after Buffett confirmed that Berkshire in April sold its “entire positions” in the four largest: American Airlines Group Inc, Delta Air Lines Inc, Southwest Airlines Co and United Airlines Holdings Inc. Buffett said he “made a mistake” investing in the sector.

The meeting was devoid of the surrounding three-day weekend of dining, shopping and other celebratory events that annually draw tens of thousands of people to Omaha for what Buffett calls “Woodstock for Capitalists”.

Originally published as Australian share market closes higher after early losses, Wall Street expected to fall