RBA call lifts $A, shares fall as capital raisings continue

Shares on the S&P/ASX 200 lifted as much as 2.6 per cent early to a four-day high of 5423.1, but were lower by the close.

Australian Dollar Coin. Note this is a circulated coin so has some nicks and scratches. Stock image of a pile of Australian dollars with Australian money in background generic

Shares fought to hold on to gains in Tuesday’s session, but ultimately slipped lower as the Reserve Bank stopped just short of calling a recession, instead warning of a “very large economic contraction”.

A strong US lead had the market primed for a second day of gains, as offshore investors cheered a slowing of the coronavirus fatality rates in some parts of Europe and New York.

Shares on the S&P/ASX 200 lifted as much as 2.6 per cent early to a four-day high of 5423.1, but by the close were lower by 35 points, or 0.65 per cent, to 5252.3.

Meanwhile, the All Ords slipped by 22 points, or 0.42 per cent, to 5301.3.

The RBA kept rates on hold at its March meeting at a historic low of 0.25 per cent as it noted “considerable uncertainty about the near-term outlook for the Australian economy” and the “very large economic contraction” that is “expected to be recorded in the June quarter”.

But hints that it could wind back its bond buying program helped the Aussie dollar 1.1pc higher to trade at US61.62c at the local close.

Westpac chief economist Bill Evans noted the governor’s statement that stimulus had already been successful, but said “it seems a little premature to be anticipating a return to stability”, adding that he was disappointed that the Bank had not provided more guidance on its outlook for economic growth and unemployment.

Optimism of a flattening curve of coronavirus victims fuelled overseas gains, but failed to buoy local shares.

China’s Shanghai Composite returned to trade after a public holiday, adding 2.1 per cent at the local close as the Hang Seng traded up 1.5 per cent and Japan’s Nikkei was boosted by 2 per cent after Prime Minister Shinzo Abe declared a state of emergency and injected further stimulus into the economy.

To equities, and capital raisings remain a key focus for investors as several more groups weighed up their options.

Oil Search revealed it was seeking $1.16bn to shore up its balance sheet amid the coronavirus crisis and oil price rout, adding it was open to selling down a stake in its PNG LNG operations. Its stock remains halted at $2.73.

Elsewhere, Flight Centre shares soared as much as 16 per cent as the company resumed trading following its successful $562m capital raise. Shares were offered at $7.20 apiece – and finished Tuesday’s session higher by 0.8 per cent at $9.99.

Plumbing group Reece also pulled off a $600m raise to give it capital to pounce on opportunities which could arise during and after the coronavirus crisis. Shares were offered at $7.60 and closed down 2.2 per cent at $8.50.

Southern Cross completed a $149m placement and institutional raise, but its deeply discounted offer price of 9c prompted a share slide – the stock closing down 30 per cent to 11.5c as one of the worst performers for the session.

In the major banks, Commonwealth slipped by 1 per cent to $61.87, Westpac gave up 1.5 per cent to $16.10, NAB lost 2.1 per cent to $16.13 and ANZ wound back by 1.3 per cent to $16.32.

Computershare was the latest to trim guidance, though did not withdraw it entirely, citing ultra-low rates as a key component of its downgrade. CPU shares still climbed by 8.2 per cent to $10.99.

In a similar move, Tabcorp announced it was standing down 700 employees and starting a raft of cost cutting measures as it grapples with venue closures – still its shares put on 2.6 per cent to $2.77.

BlueScope dipped by 4.3 per cent to $9.92 as it cancelled its share buyback program and pushed back its $1bn US expansion.

Real estate stocks managed a daily gain, with new measures announced by the government to assist tenants. The sector finished higher by 1.4 per cent as Scentre rose by 3.9 per cent to $1.75, Stockland lifted by 2.8 per cent to $2.56 while SCA Property shares were halted at $2.36 apiece as it looks to raise equity.

Across the major miners, BHP gave up 0.3 per cent to $31.70, Rio Tinto edged up by 0.3 per cent to $90.65 and Fortescue added 1.8 per cent to $11.42.