Australian stock market is up for a third day in a row, as Wall St improves amid virus fears

Australian shares have rallied for a third straight day after a massive US stimulus deal sent global markets up — but experts say it doesn’t mean it’s healthy.

Australian shares have rallied for a third straight day after a massive US stimulus deal sent global markets soaring.

The S&P/ASX200 benchmark index finished Thursday up 115.2 points, or 2.3 per cent at 5,113.3, while the All Ordinaries index closed up 129 points, or 2.58 per cent, at 5,135.2 points with all sectors higher.

Markets around the world were higher after the US Senate passed an unprecedented $A3.3 trillion emergency aid bill to try and save the world’s largest econony. “The optimism around that, a bit of a relief rally going on, in particular in the tech sector,” said Burman Invest chief investment officer Julia Lee. The technology sector gained 7.4 per cent, with Afterpay soaring 29.4 per cent to $29.40.

Genworth Mortgage gained 22 per cent and Star Entertainment Group climbed 21.0 per cent.

Given the economic crisis, all three companies are not expected to do well in the short term but Ms Lee said traders may have overplayed their hand. “I’d say there’s an element of short covering going on in the market today,” she said.

Short covering occurs when traders bet a stock will fall and it instead rises, so they are forced to buy it to cut their losses, pushing the price up further. Ms Lee said the three days of gains hardly meant that the downturn was over. Relief rallies are normal during bear markets and they tend to be severe and shallow, she said.

Australian shares look set to rally for a third straight day. Picture: Getty Images

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“Big up moves aren’t a sign of a healthy market,” she said.

“You can’t say that earnings are driving the market, because earnings are so clouded.” Indeed there was another string of Covid-19 job losses and more companies withdrew earnings guidance.

Virgin Australia gained 17.9 per cent to 8.3 cents after it said redundancies would top 1,000 while Flight Centre was untraded as it talked of standing down or sacking 6,000 workers.

Two shopping mall property groups fell after Premier Investments shutdown brands including Smiggle, Peter Alexander, Portmans and Just Jeans and said it would not pay rent to landlords.

Vicinity Centres dropped 4.9 per cent to $1.06 and Westfield;s owner Unibail- Rodamco-Westfield fell 8.9 per cent to $5.11, while overall the property sector was up 3.9 per cent.

The big supermarkets were mixed, with Coles down 0.6 per cent at $16.55 and Woolworths up 0.9 per cent to $35.93.

The big banks were mostly up, with NAB climbing 2.2 per cent to $16.14, ANZ up 0.8 per cent to $16.70 and Westpac up 1.1 per cent to $16.02. Commonwealth was the outlier, falling 1.0 per cent to $61.80. In the heavyweight mining sector, BHP dropped 2.0 per cent to $30.67 but Rio Tinto gained 5.1 per cent to $88.13 and Fortescue Metals rose 2.9 per cent to $10.52.

Goldminers were mostly lower as the price of the precious metal fell 1.0 per cent to just under $US1,600, with Northern Star falling 15 per cent after announcing that it would defer paying its interim dividend and was withdrawing its guidance because of the impact of measures to control the coronavirus. In non-coronavirus news, Seven West Media gained 12 per cent to 7.7 cents after the ACCC said it would not stand in the way of Bauer Media’s acquisition of Seven’s Pacific Magazines.

Brickworks dropped 1.3 per cent to $15.05 after announcing its first-half statutory net profit dived nearly 50 per cent on the back of a slowdown in building activity in Australia.

The Aussie dollar was buying 59.14 US cents, down from 60.33 US cents at market close on Wednesday.

US STOCKS ‘OPEN HIGHER’

Wall Street stocks opened higher as markets awaited a vote on a $US2 trillion ($A3.4 trillion) package agreed by congressional leaders to boost the US economy ravaged by the coronavirus outbreak.

It came a day after the Dow soared 11.4 per cent, notching its biggest one-day percentage gain since 1933 after a big pullback due to the virus.

The Dow Jones index was up by 2.6 per cent in early trading, helping pull most European markets along with it.

The "Fearless Girl" statue outside the New York Stock Exchange wears a surgical mask as the market tries to fight off the effects of coronavirus. Picture: AP

Frankfurt was the outlier, shedding 0.4 per cent in afternoon trading.

Meanwhile, the dollar gained ground against other major currencies, while oil prices slipped lower.

“The stimulus is now by and large in place,” said Neil Wilson, chief market analyst at trading group Markets.com. “The question is whether it’s enough for the markets.”

“All we can do is stay at home and hope that in six months, life has moved on and all of these stimulus efforts have protected people and businesses, and accelerated the recovery,” Craig Erlam, senior market analyst at OANDA Europe.

People walk by an electronic stock board of a securities firm in Tokyo. Picture: AP

While COVID-19 continues to spread, traders gave a rare show of optimism after weeks of huge losses.

Their eyes are fixed on Washington, where congressional leaders have thrashed out an emergency bill worth as much as $USS2 trillion – around 10 per cent of US gross domestic product.

US Senate Majority Leader Mitch McConnell. Picture: AFP

Senate Minority Leader Chuck Schumer. Picture: AP

“At last, we have a deal,” Senate Majority Leader Mitch McConnell said, calling it a “wartime level of investment into our nation”.

“We have a bipartisan agreement on the largest rescue package in American history,” top Senate Democrat Chuck Schumer said shortly after McConnell spoke.

The number of known coronavirus infections has leapt past 435,000 people worldwide, and more than 19,000 have died, according to Johns Hopkins University. Overall, more than 111,000 have recovered.

Originally published as Australian stock market is up for a third day in a row, as Wall St improves amid virus fears