Few winners as ASX falls amid America’s worsening coronavirus crisis
There were few winners on the ASX today after it dropped almost two per cent amid increasingly dire warnings about how bad the coronavirus crisis could get in the US.
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The Australian share market has dropped again amid increasingly dire warnings about how bad the coronavirus crisis could get in the United States.
But in a sign of the times, one analyst called the nearly two per cent drop a victory for the bullish, in terms of the market not suffering a much broader sell-off.
The S&P/ASX200 benchmark index finished Thursday down 104.3 points, or 1.98 per cent, at 5,154.3, while the All Ordinaries index dropped 102 points, or 1.93 per cent, to 5,188.7.
“I don’t think it’s too bad, to be honest,” said Pepperstone head of research Chris Weston.
“It could have been a lot worse. It could have been quite an ugly session. It’s a win for the bulls.”
With the White House discussing a coronavirus death toll of up to 240,000 in the United States, losses of up to four per cent were on the table, Mr Weston said.
All eyes are on America for signs of how serious the epidemic will get there, even as Australia copes with its own outbreak, Mr Weston said.
“I feel that we’re going to grind from here, rather than have big impulsive moves, for the next week or so,” he said.
The consumer staples and energy sectors were the only winners on Thursday, with the financial sector leading the losers with a 4.2 per cent decline.
The big four banks were all lower after the Reserve Bank of New Zealand announced they wouldn’t be able to receive dividends from their Kiwi subsidiaries during the coronavirus pandemic.
NAB dropped 5.6 per cent to $16 and ANZ fell 5.3 per cent to $16.15. Commonwealth Bank shed 3.8 per cent to $61.24 as it announced it will make a one-time payment to all customers who are receiving a home loan deferral because of the coronavirus.
Westpac shares fell 4.3 per cent to $15.98 after revealing it would make Peter King’s interim chief executive appointment a permanent one.
Macquarie Group dropped 1.4 per cent to $88.06 while insurers QBE and Suncorp dropped 5.0 and 4.4 per cent, respectively.
Tech stocks collectively dropped 3.6 per cent, with Xero down 5.4 per cent, Altium down 4.7 per cent and WiseTech Global down 5.8 per cent. In the heavyweight mining sector, BHP lost 1.3 per cent to $29.85 and Rio Tinto lost 1.1 per cent to $87.40, while Fortescue dropped 3.5 per cent to $9.99 But goldminers were up, with Newcrest rising 4.0 per cent, Evolution climbing 5.1 per cent and Northern Star gaining 0.8 per cent.
Early education provider G8 Education soared 28.6 per cent to a nearly three- week high of $1.08 after the Federal government promised to make childcare free for parents due to the coronavirus crisis and to provide relief to the sector. International education placement company IDP Education soared 27.6 per cent to $14.75 after it announced the successful completion of a $225 million institutional placement to strengthen its balance sheet.
Property companies Dexus, Mirvac, Vicinity Centers, and GPT Group were all down between 4.1 and 5.7 per cent.
Blood products giant CSL gained 0.4 per cent to $308.27, Sonic Healthcare fell 6.5 per cent to $23 and Ramsay Health Care dipped 3.8 per cent to $59.55. Webjet gained 1.8 per cent to $2.78 after completing a similar equity raising for $231 million.
The Australian dollar is buying 60.84 US cents, up from 60.80 US cents as the market closed on Wednesday.
‘NO BUYBACK SUPPORT’: HARSH REALITY FOR WALL ST
Wall Street followed its worst trading quarter since 1938 with more gloom after stocks here tumbled again on the back of worsening US coronavirus figures.
The pandemic’s impact on corporate profits and dividends continues to smash market confidence.
The S&P 500 was down more than 4.4 per cent at the close of trading Wednesday.
“Markets are looking at global equities in a new light, one with no buyback support and no dividends,” said Chris Weston, head of research at Pepperstone Financial Pty Ltd. The earnings season is likely to trigger a decline in consensus S&P 500 profit expectations which “are far too high relative to dividend futures,” he said.
The drop in the S&P 500 followed a sell-off in Europe and Asia after President Trump said the US would face a “very, very painful two weeks” after scientists projected that the outbreak could kill up to 240,000 people in the States.
The economic readings continue to worsen as well.
On Wednesday, surveys of manufacturing and factory activity in the United States, Europe and Japan showed activity slowing to levels not seen in a decade or more. In the United States, factory orders and employment measures fell to their lowest since 2009, the Institute for Supply Management said.
News that as many as 240,000 Americans may be killed by COVID-19 shook Wall Street.
Market watchers believe the coronavirus will almost certainly lead the world into recession, and economists are becoming less convinced about the potential for a strong snapback in growth.
Factories around the world suffered one of their grimmest months on record in March, as the coronavirus led to mass shutdowns and wreaked havoc on supply chains.
Fears are growing that the global downturn could be far worse and more protracted that first expected.
More punishing and long lasting than initially feared — potentially enduring into next year, and even beyond — as governments intensify restrictions on business to halt the spread of the pandemic, and fear of the virus impedes consumer-led economic growth.
Stocks are beginning the new quarter with more declines, hot on the heels of the worst quarter for global shares since 2008. Investors disappointed with the loss of dividend income could spark a fresh wave of selling, knowing that analysts are dashing to update earnings forecasts to take into account the looming global recession and the slump in stock prices.
Contracts on the three main U.S. indexes all slumped, and those on the S & P 500 slid as much as 4% after President Donald Trump warned of a “painful” two weeks ahead, with the country grappling to get the outbreak under control and New York City’s death toll topping 1,000.
Banks including Wells Fargo & Co., Bank of America and Citigroup Inc. were down in pre-market trading, tracking moves in Europe after lenders including HSBC Holdings Plc and Standard Chartered Plc halted dividends and share buybacks.
The Stoxx Europe 600 index dropped broadly, even after the European Union unveiled plans to save jobs during the crisis.
The euro extended its drop as manufacturing data from the single-currency region painted a bleak picture, with Italy’s purchasing managers’ index posting a record drop. Stocks in Japan hit session lows in the final hour of trading, closing down almost 4 per cent.
Hong Kong shares also dropped. Chinese equities outperformed as a private reading on the country’s PMI beat expectations, rebounding in March.