ASX closes lower after early gains as Aussie dollar enjoys ‘incredible recovery’

The Australian share market has dropped after surging as trading day opened, with investors rattled following an announcement by US officials that ruled out a return to normal life until a COVID-19 vaccine is found.

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The Australian share market has been unable to sustain its early gains, closing down after officials in the US ruled out a return to normalcy until a coronavirus vaccine is found.

The S&P/ASX200 benchmark index touched a high of 5,423.1, a gain of 2.7 per cent, in the first 10 minutes of trade but ended up finishing Tuesday down 34.5 points, or 0.65 per cent, to at 5,252.3 points.

The All Ordinaries index shed 22.3 points, or 0.42 per cent, to 5,301.3, after going as high as 5,464.2.

“We started off on a positive note, given we saw a fantastic session in the US,” said Burman Invest chief investment officer Julia Lee, referring to Wall Street’s gains of over seven per cent.

But the gains dissipated following a coronavirus task force briefing at the White House at which key member Dr Anthony Fauci suggested life wouldn’t return to normal in America until a vaccine is found, dampening a sense from Europe that the lockdowns could be lifted in several weeks, Ms Lee said.

The Australian share market has been unable to sustain its early gains, closing down after officials in the US ruled out a return to normalcy until a coronavirus vaccine is found. Picture: AAP

The losses were concentrated at the top end of the market, with the ASX20 falling 1.35 per cent, while the ASX MidCap 50 gained 0.9 per cent and the Small Ordinaries index of small-cap companies gained 1.0 per cent.

“That suggests that a lot of the selling was index-based, and that it’s a time to be stock selective,” Ms Lee said.

Among the blue chip stocks in retreat were CSL, which fell 2.5 per cent to $311.99; Woolworths, which dropped 2.8 per cent to $36.10; and Wesfarmers, which retreated 3.8 per cent to $35.31.

Utilities were the biggest losers, dropping 2.7 per cent as APA Group tumbled 4.3 per cent to $10.24.

All the big banks were down, with Commonwealth falling 1.0 per cent to $61.87, ANZ dipping 1.3 per cent to $16.32, NAB dropping 2.1 per cent to $16.13 and Westpac declining 1.5 per cent to $16.10.

Capital raisings continued to be a major theme as companies took action to shore up their balance sheets amid the coronavirus crisis.

Flight Centre resumed trading after a two-week break during which it raised $562 million, with its shares closing up 12.0 per cent to $9.99.

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Southern Cross Media finished down 1.9 per cent to 11.5 cents after a similar break during which it raised $169 million at nine cents a share. As for the big miners, BHP dropped 0.3 per cent to $31.70 while Rio Tinto gained 0.3 per cent to $90.65, and Fortescue Metals rose 1.8 per cent to $11.42. Goldminers shone as the price of the precious metal rose to $US1,660 an ounce, with Newcrest up 2.5 per cent, Evolution gaining 3.3 per cent and Northern Star climbing 7.5 per cent.

The Australian dollar meanwhile rose 1.6 per cent against its US counterpart after the Reserve Bank of Australia kept rates on hold at 0.25 per cent. It was buying 61.84 US cents as the market closed, up from 60.50 US cents at the close of markets on Monday and up from under 56 US cents two weeks ago.

“It’s been an incredible recovery for the Aussie dollar,” Ms Lee said.