ASX closes 6.4 per cent lower at 4953.2 points, energy companies worst hit

The Australian share market has lost all of yesterday’s gains after suddenly plummeting below 5000 points and closed 6.4 per cent lower.

The Aussie share market finished at its lowest closing level since 2016 following yet another roller coaster day.

The ASX closed at 4953 points this afternoon – a drop of 6.43 per cent for the day.

Energy companies were among the biggest losers, with Worley dropping 22.8 per cent, Origin Energy 14.4 per cent and Santos 12.3 per cent lower.

Technology companies were also hit hard, with Afterpay falling 33.1 per cent and Zip Co 17.8 per cent.

Analysts said global markets were teetering on a “knife edge” as the coronavirus pandemic unfolded.

“The fog of war in financial markets is still thick,” IG market analyst Kyle Rodda said in a note this afternoon.

“Markets are certainly not operating efficiently at the moment, and as it stands, there isn’t a strong indication financial conditions are turning around.

“The situation really is on a knife edge, with fiscal and monetary policymakers doing the best they can to stabilise an increasingly unstable environment.”

Mr Rodda said the Australian government had joined the line of governments “throwing good money at bad companies” to keep them afloat.

“Amongst the suite of new COVID-19 emergency measures announced by the Morrison Government today was a $175 billion support package for the airline industry. While clearly necessary, for better or worse, to keep the economy running, and ensure that a big-ticket airliner doesn’t default on its debt, and cause a cascade of defaults through corporate credit markets, the government hand-out to a company like Qantas is surely a slap in the face to taxpayers,” he said.

“The average punter is being forced to foot the bill of a poorly run company. Given this, and its history of generally lacklustre financial performance, not to mention share buybacks, Qantas has put the social contract it inherited from the Australian people through the shredder.”

He said today’s ban on all international travel, indoor gatherings of more than 100 people and outdoor gatherings in excess of 500 people also likely affected the stock market today.

“Giving hope to market participants, the Morrison Government has flagged it is working in concert with Treasury and the RBA to construct another stimulus package, that’ll be designed to support small businesses and individuals through the COVID-19 crisis,” he said.

“As markets wait for that package, attention does turn to the RBA now. It’s scheduled to announce its own suite of new monetary policy stimulus measures tomorrow, which will likely see the cash rate cut to 0.25 per cent, and a quantitative easing program launched, amongst other possible policy measures.”