ASX rallies as Wall Street rose as upbeat news about a potential coronavirus treatment
The Australian share market has surged back in April as upbeat news about a potential coronavirus treatment emerged.
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The Australian share market has followed up its worst month ever in March with its best month ever in April.
The S&P/ASX200 benchmark index rallied Thursday for its best day in three weeks, closing up 129 points, or 2.39 per cent to close at 5,522.4 points, its best level since March 13.
The broader All Ordinaries index gained 133.9 points, or 2.45 per cent, at 5,597.7 points.
One Aussie dollar was buying 65.57 US cents, up from 65.36 US cents at Wednesday’s close.
Oil Search had a great morning with an 18 cents, or 6.52 per cent gain in its share price, to $2.94.
Beach Energy had a rise of 7 cents, or 5.07 per cent, to $1.45. The industrials sector has done well, too, up by 2.15 per cent. Transurban was up 40 cents, or 3.04 per cent, to $13.55.
The technology sector was helped by Afterpay, which increased by $1.95, or 6.93 per cent, to $30.10.
Materials shares were up 1.8 per cent, led by news of Fortescue Metals hiking its annual iron ore shipments forecast.
Fortescue reported a 10 per cent rise in third-quarter shipments and said it had managed to keep a lid on costs amid the coronavirus pandemic. Its shares climbed by 62 cents, or 5.28 per cent, to $12.36. Larger rival BHP was up 51 cents, or 1.64 per cent, to $31.63, while Rio gained $1.75, or 2.05 per cent, to $87.26.
Australia’s largest listed goldminer Newcrest Mining announced a $1.1 billion equity raising, in part to fund its $US460 million further stake in a goldmine in southeast Ecuador.
The institutional placement is at $27.54 a share, a seven per cent discount on Wednesday’s closing price, although Newcrest shares are currently in a trading halt.
Woolworths reported a 10 per cent jump in food sales at its Australian supermarkets for the third quarter, due to panic buying amid the coronavirus pandemic.
However it was not enough to please investors, who forced the share price down by 24 cents, or 0.67 per cent, to $35.79.
ANZ was the only one of the big four banks in negative territory - down 19 cents, or 1.14 per cent to $16.47 after announcing it will delay paying shareholders an interim dividend after first-half cash profit plunged 62 per cent to $1.32 billion.
The fall in profit was due to higher credit charges and COVID-19 impairments. NAB was higher by 53.5 cents, or 3.28 per cent, to $16.82. Westpac rose 27 cents, or 1.72 per cent, to $15.96, and Commonwealth Bank inched up 70 cents, or 1.15 per cent, to $61.77.
Health care and utilities were the only sectors trading lower. Each had average losses of less than 1 per cent.
Overnight, big tech companies provided the biggest lift to the US S&P 500 and the Nasdaq, and pushed all three major US stock averages closer to their all- time highs reached in February.
Drugmaker Gilead Sciences announced that its drug Remdesivir is showing promise as an effective treatment for COVID-19, which has killed more than 226,000 people across the world.
One Aussie dollar was buying 65.44 US cents at 1200 AEST, up from 65.36 US cents at Wednesday’s close.
Wall Street rose as upbeat news about a potential coronavirus treatment from drugmaker Gilead Sciences helped offset a larger-than-expected drop in first-quarter gross domestic product.
This followed a rally in global stocks, with investors encouraged by new indications that the antiviral drug remdesivir could be showing progress.
There were also solid gains in Europe. The Wall Street rise came despite data that showed the US economy shrank by the most since 2008 in the first quarter of the year.
But investors had already factored in bad news on the economy and from companies, and stocks have been climbing over the past five weeks as traders focus on progress in the efforts to contain the coronavirus pandemic and reopen the world’s economies. The S&P 500 is up nearly 30 per cent since its March 23 low.
“These markets have a mind of their own,” OANDA analyst Craig Erlam told AFP.
“All investors see is bargains at the moment. It’s nice to see some optimism in these otherwise grim times but there seems to be complete disregard for the actual facts and figures.
“That said, we live in a world of unprecedented central bank stimulus, the money has to go somewhere I guess. Still, it seems to be built on very shaky foundations, which is a concern.”
The US economy contracted 4.8 per cent in the first quarter, according to an advanced reading from the Commerce Department, outstripping the 4 per cent drop that economists surveyed by Refinitiv were expecting. The negative print was the first in six years and the biggest since the financial crisis.
And investors are steeling themselves for much worse news to come.
Widespread lay-offs and business closings leading to 30 million people joining dole queues didn’t happen until late March, or the very end of the quarter, in most of the country. Economists expect figures from the current quarter, which will capture the shutdown’s impact more fully, to show that GDP contracted at an annual rate of 30 per cent or more.
In London, the FTSE 100 was up 2,2 per cent, the DAX 30 in Frankfurt was up 2.0 per cent, the CAC 40 in Paris was up 1.6 per cent, and the Hang Seng in Hong Kong was up 0.3 per cent.