ASX rebounds as Wall Street surges on stimulus news amid coronavirus outbreak

The Australian share market has staged a rebound in another session rife with volatility, after Wall Street chalked up its biggest single-day rally in 87 years.

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The Australian share market has staged a rebound in another session rife with volatility after Wall Street chalked up its biggest single-day rally in 87 years.

And major companies have leapt from the starting blocks in the race to bolster their books as the economy spirals toward recession amid the fallout from the coronavirus pandemic.

Last night in the US, key share index the Dow Jones Industrial Average soared a staggering 11.4 per cent — its biggest rally for any day since 1933, when the market was coming off its nadir during the throes of the Great Depression.

The surge came as politicians there worked through an agreement to unleash a sweeping stimulus program intended to mitigate the economic turmoil ushered in by the pandemic.

Here, the benchmark ASX 200 index rallied more than 6 per cent at the open today, only to surrender most of those gains in late morning and early afternoon trade.

About 2.30pm, the gain had been whittled down to less than 2 per cent.

The Australian share market has jumped at the open after Wall Street posted its biggest one-day rise since 1993. Picture: Getty Images

But the market came back with a canter toward the closing bell as US Senate leaders agreed to terms for a $US2 trillion ($3.3 trillion) stimulus package.

The ASX 200 ended the session 5.5 per cent higher to settle just shy of 5000 points.

It was the second-biggest rally for any day since the index was launched 20 years ago — edged out by its 5.8 per cent spike on Tuesday last week.

The jump added almost $78 billion to the value of the nation’s biggest companies.

It means the market, across the week so far, is on higher ground, although the ASX 200 is still down 30 per cent from its highest on February 20.

The rally came as Qantas Airways and hearing implant supplier Cochlear took steps to bolster their books as lockdown necessitated by the pandemic buffet the economy.

Qantas announced it had raised $1.05 billion in debt, using as security seven Boeing 787-9s for which the airline paid cash in recent years.

The group said the funding increased to $2.95 billion its available cash balance, and it also had another $1 billion debt available to tap.

Chief executive Alan Joyce said the company had strengthened its balance sheet significantly in recent years “and we’re now able to draw on that strength under what are exceptional circumstances”.

“Everything we’re doing at the moment is focused on guaranteeing the long term future of the national carrier, including making sure our people have jobs to return to when we have work for them again.”

US STIMULUS SPARKS MARKET RALLY

Wall Street posted its best performance in nearly 90 years on Tuesday, as indices rallied on hopes that politicians would soon agree on a massive stimulus package to blunt the coronavirus’ economic impact.

The Dow Jones Industrial Average surged 11.4 per cent rallying to end the session at 20,704.91, its biggest one-day percentage increase since 1933.

The tech-rich Nasdaq gained 8.1 per cent to close at 7,417.86, while the broadbased S&P 500 finished the day at 2,447.33, a gain of 9.4 per cent.

US Federal Reserve Board Chairman Jerome Powell (R) looks on before a meeting with the Finance Ministers and Central Bank Governors of the G7 nations during the IMF and World Bank Fall Meetings in this 2019 file photo. Picture: AFP

Investors rallied on expectations the US Congress was close to reaching an agreement on a stimulus package totalling $2 trillion or higher to get Americans spending again and ensure businesses don’t go under after the coronavirus forced entire cities and states to lockdown.

The details of the package are under negotiation, but Republicans who control the Senate have proposed sending out checks of as much as $1,200 per-person and $500 for each child, depending on income.

They also have proposed offering $500 billion to corporations, including $50 billion to revenue-strapped airlines, as well as $300 in loans to small businesses.

Traders on Wall Street have witnessed weeks of losses. Picture: AFP

“The market is expecting a major fiscal package to help cushion the downside caused by the shutdown of the economy,” Quincy Krosby of Prudential said, adding that provisions specifically directed at small businesses were encouraging investors.

“The key is to get the money out as quickly as possible and not wait,” Krosby said.

The package will come on top of a series of moves by the Federal Reserve to pump trillions of dollars of liquidity into the financial system to stop it from seizing up, and become a lender of last resort for businesses.

The stocks rally buoyed a slew of companies, including American Express, whose share price rose by 21.9 per cent, and Chevron, which climbed 22.7 per cent after it said it still intended to issue a dividend to shareholders.

Boeing climbed 20.9 per cent in a rare bit of good news for the company hit hard both by the grounding of its 737 MAX model and the recent fall-off in demand for air travel.

Originally published as ASX rebounds as Wall Street surges on stimulus news amid coronavirus outbreak