ASX erases rally in 7.5pc swing

Strong stockmarket gains at the open evaporated trimming the benchmark’s weekly rise to just 0.5 per cent.

Governments will continue to impose restrictions on social mobility, severely curtailing activity during the coronavirus pandemic. Picture: AP

Strong stockmarket gains at the open evaporated by lunch, with renewed selling trimming the benchmark’s weekly rise to just 0.5 per cent.

An early boost from US optimism helped the S&P/ASX200 to a nine-day high of 5236.7 in the first hour, but sentiment soured as the US coronavirus case count rose to be the highest in the world, and as retail landlords came under further pressure from store closures.

By the close, the benchmark was trading at the day’s low of 4842.4, down 271 points, or 5.3 per cent, for the day.

Meanwhile, the All Ords finished lower by 261 points, or 5.1 per cent, to 4874.2.

The Aussie dollar, however, was higher by the close, adding 0.7 per cent for the session to trade at US61.03c.

In a week of heavy-handed fiscal and monetary stimulus, ANZ head of FX research Daniel Been noted that the picture for the global economy and markets still looked bleak.

“Governments will continue to impose restrictions on social mobility, severely curtailing activity. Many businesses are searching for ways to maintain operational normalcy with restricted supply chains and fewer customers,” he said.

“Many cannot, and the explosion in risk premia for corporates is evidence that cash flow pressures will not go away soon.”

He added that optimism displayed on the market earlier in the week was “perhaps acknowledgment that despite the enormous challenges, the actions of governments as well as innovative testing and treatment will eventually diminish the health threat of COVID-19”, but not until the fourth quarter.

Still, Australia was markedly more pessimistic than the rest of the Asia Pacific on Friday – China’s Shanghai Composite was higher by 0.91 per cent at the local close, while the Hang Seng was up by 0.4 per cent and Tokyo’s Nikkei jumped 2.2 per cent.

To equities, and REITs were the worst performing sector, down 8.7 per cent as investors weighed the impact of further store closures in the wake of broader social distancing measures.

Scentre took a 12.5 per cent hit to close at $1.51 apiece as Premier Investments, the Solomon Lew controlled retail owner, escalated its war with the landlord over rental assistance.

Premier meanwhile slipped 0.3 per cent to $10.39.

Elsewhere in real estate, GPT Group gave up 10.8 per cent to $3.30, Charter Hall Retail REIT lost 14.7 per cent to $2.96 and SCA Property lost 10.7 per cent to $2.26.

Banks too felt the squeeze on credit concerns – Westpac lost 7 per cent to $14.89, Commonwealth Bank took a 6.7 per cent cut to $57.66, ANZ lost 7.4 per cent to $15.47 and NAB gave up 6.3 per cent to $15.12.

Woolworths was trimmed by 5.3 per cent to $34.80 as it said it was hiring 20,000 workers to respond to a surge in demand while rival Coles edged lower by 5 per cent to $15.73.

Qantas wound back Thursday’s rally by 4.3 per cent to close out the week at $3.11 as Virgin lost 14.5 per cent to 7.1c amid speculation that a takeover by Singapore Airlines could be on the cards after the Southeast Asian airline launched a $US10.5bn ($17.2bn) capital raise.

Energy producers felt the pressure as two of the biggest LNG names in the country delayed key projects. Woodside said it would defer three of its major projects – sending shares down 6.4 per cent to $16.84, while Beach Energy slashed its spending by a third – prompting a 5 per cent slip to $1.04.

And in the major miners, BHP fell by 5.3 per cent to $29.03, Rio Tinto slipped by 2.7 per cent to $85.78 and Fortescue lost 8.8 per cent to $9.60.