ASX falls, Wall Street rises on COVID-19 cure hopes

The wild ride for the Australian share market has continued with a 330-point swing that turned its early strong gains into a massive loss.

A trader works at the New York Stock Exchange. Picture: AFP

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The wild ride for the Australian share market has continued with a 330-point swing that turned its early strong gains into an afternoon loss.

The S&P/ASX200 benchmark closed Tuesday down 104.6 points, or 2.02 per cent, at 5,076.8.

It had climbed by as much as 3.5 per cent to 5,366.4 in early trade, marking the benchmark’s highest point in 11 sessions and a rise of more than 21 per cent from a seven-year low hit just last week.

The All Ordinaries index dropped 83.4 points, or 1.61 per cent, to 5,110.6. The Australian dollar was buying 61.89 US cents, up from 61.47 US cents as the market closed on Monday.

Earlier at midday, the S&P/ASX200 benchmark index was up another 140.3 points, or 2.71 per cent at 5,321.7 today.

It had climbed by as much as 3.5 per cent to 5,364.7 in early trade, marking the benchmark’s highest point in 11 sessions and a rise of more than 21 per cent from a seven-year low hit just last week.

The ASX 200 banked a record 7.0 per cent gain in the previous session following the federal government’s announcement of another $130 billion in COVID-19 stimulus measures.

The Australian share market has edged higher in early trade this morning, extending its gains following on from its biggest one-day rise in more than 40 years. Picture: AAP

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The All Ordinaries index was also up on Tuesday, rising 148.6 points, or 2.86 per cent, to 5,342.6 by midday.

Miners and consumer staples continued to lag but were more than offset by a strong performance by the heavyweight financials – with all four big banks on the ascendancy.

Commonwealth Bank gained 6.3 per cent to $67.98, Westpac was up 7.89 per cent to $17.435, ANZ rose 6.23 per cent to $17.83 and NAB jumped 6.99 per cent to $17.45.

Macquarie Group climbed 5.49 to $90.45, while Bank of Queensland and Bendigo and Adelaide Bank added 3.17 per cent and 5.2 per cent respectively. Health stocks were also on the rise with CSL up 1.72 per cent to $318.07, Sonic up 2.61 per cent to $25.12 and Ramsay Healthcare up 4.37 per cent to $60.88. Wesfarmers – fresh from announcing the sale of a 5.2 per cent stake in supermarket Coles – was up 2.62 per cent to $36.83.

Coles shares fell 6.6 per cent to $15.71 and rival Woolworths dropped 3.22 per cent to $36.91.

Tech, energy, utilities and property sectors all recorded gains of more than 3.0 per cent in early trade.

Gold miners were a rare patch of red on the heatmap with Newcrest, Northern Star, and Evolution each losing between 1.88 per cent and 5.01 per cent. Virgin Australia shares remained in a trading halt after it confirmed to the ASX it had requested $1.4 billion from the federal government as part of a wider industry support package.

Elsewhere, mining giant BHP was down 0.96 per cent to $29.91 and Rio Tinto slipped 0.71 per cent to $86.92 over worries about prolonged shutdowns due to the coronavirus, reinforcing fears of tumbling demand for industrial metals. The local market, however, has seemingly been energised by the federal government’s new stimulus to help businesses through the coronavirus pandemic. The S&P/ASX200 benchmark index finished Monday up 399 points – a record 7.0 per cent.

In an unprecedented move, employees will receive a flat-rate payment of $1500 per fortnight through their employers in a bid to lessen the economic blow caused by COVID-19.

More than 110,000 businesses have signed up for the scheme since it was announced on Monday afternoon.

The payment amounts to about 70 per cent of the median wage. The Australian dollar was buying 61.70 US cents at midday today, up from 61.47 US cents as the market closed yesterday.

VIRUS CURE HOPES GIVES WALL ST BOOST

Wall Street stocks headed north on the back of rising health care company shares as news filtered out that they were making good progress on products to deal with the deadly coronavirus.

The S & P 500 climbed more than 3.3 per cent, which is any normal market situation would be regarded as spectacular. But it stood as one of the market’s milder days since the outbreak knocked nearly a quarter off the S & P 500 during the past two months.

There was finally some positive news out of Wall Street. Picture: AP

In these troubled times, investors don’t know how long any upside will last. Indeed, some analysts believe the S & P 500 has done a “death cross” into bear market territory.

Still troubling for market watchers was that oil prices plummeted to their lowest level in nearly two decades.

“It’s hardly been a calm market,” said David Rosenberg of Rosenberg Research. “US equity futures have actually been all over the map today, as have the European bourses, where the region’s economic sentiment indexes in March tumbled the most on record. Asia was a sea of red outside of Australia where the market bounced off another huge fiscal stimulus package.”

After Washington approved the $A3.6 trillion relief fund, the index rose 10 per cent last week after a three-day run that was its best since 1933.

A man pauses along stairs near Wall Street. Picture: Getty

Johnson & Johnson was in favour on Wall Street after it announced it had found a lead candidate for a vaccine for the virus and planned to ramp up both production and clinical testing.

The news of a possible five-minute test for the virus being given the green light by the Food and Drug Administration also saw shares rise in Abbott Laboratories.

There was more devastating news for the bricks and mortar retail sector with iconic department store Macy’s standing down about 130,000 employees as a direct result of the virus lockdown in the US.

Like many retailers, Macy’s had already said it would suspend quarterly dividend and withdrew its 2020 sales and profit forecasts in response to the uncertainty and financial hit from the store closures.

A surgical mask is placed on the famous "Fearless Girl" statue outside the New York Stock Exchange. Picture: AP

The company said online sales were not sufficient to avoid the lay-offs and that it would start re-employing workers in stages after the crisis passed.

“We’ve already taken measures to maintain financial flexibility,” the company said in a statement. “While these actions have helped, it is not enough.”

SunDial Capital Research said that despite the S & P 500’s bounceback, it has still done a so-called “death cross”, where the S & P 500’s 50-day moving average crosses below its 200-day moving average.

“The returns across stocks, sectors, and the S & P 500 index itself suggest that this is not a robust sell signal. If anything, it’s the opposite over a medium- to long-term time frame,” the SunDial team said.

“The only caveat is that quite a few of the recent signals saw a testing phase of the initial low, though that has become such consensus opinion right now, it seems unlikely for the market to accommodate so many similar opinions.”

Originally published as ASX falls, Wall Street rises on COVID-19 cure hopes