ASX jumps despite RBA’s recession fears: Wednesday 1 April

Derek Rose
(Australian Associated Press)


The Australian share market has rallied as coronavirus-fuelled volatility continues, even as the Reserve Bank released minutes showing members were worried about the likelihood of a recession.

The S&P/ASX200 benchmark index closed on Wednesday up 181.8 points, or 3.58 per cent, at 5,258.6, while the All Ordinaries index finished up 180.1 points, or 3.52 per cent, to 5,290.7.

“From the get-go, we knew it was going to be a good start to the quarter and the month, which is great,” said Bell Direct market analyst Jessica Amir.

The market wasn’t deterred even after the RBA released minutes from a meeting a fortnight ago, when it launched emergency stimulus measures, showing board members thought it was probable the coronavirus crisis would result in at least two back-to-back quarters of economic contraction.

That’s the technical definition of a recession, even if the RBA didn’t use the word.

Australian bonds rallied as investors piled into the safe-haven asset, with yields dropping 19.7 and 14.7 per cent to all-time lows on the three- and five-year notes.

But all sectors still finished at least 2.0 per cent higher, with energy stocks leading the way, collectively up 8.1 per cent as the price of oil price spiked two per cent after US President Donald Trump called Russia’s Vladimir Putin to discuss stabilising the price of the natural resource.

Oil Search climbed 12.6 per cent to $2.68, Santos rose 9.7 per cent to $3.75, and Woodside Petroleum gained 7.9 per cent to $19.64.

Energy companies were smashed throughout March by the coronavirus pandemic and the eruption of an oil price war between Russia and Saudi Arabia that saw oil prices plunge.

Property stocks were another strong performer, up 5.2 per cent as Scentre Group soared 12.5 per cent after the Westfield mall owner secured additional bank facilities that took its liquidity to $3.1 billion.

“That’s what the market wants in times like these – companies that have adequate capital to navigate the most turbulent conditions we’ve seen in a very long time,” Ms Amir said.

All of the big banks finished up, with CBA rising 3.0 per cent to $63.67, NAB up 1.6 per cent to $16.95, Westpac up 1.2 per cent to $16.70 and ANZ up 0.5 per cent to $17.05.

Big miner BHP jumped 4.3 per cent to $30.23 and Rio Tinto shares were up 4.5 per cent to $88.40.

Goldminers were mixed as the price of the safe-haven metal dropped overnight, with Northern Star down 2.1 per cent while Evolution rose 2.1 per cent after announcing COVID-19 restrictions weren’t hampering its mining and that it had completed its $A552 million acquisition of the Red Lake goldmine in Canada from Newmont Corp.

Newcrest gained 1.5 per cent after earning a 40 per cent stake in its Haverion Project joint venture with Greatland Gold in Western Australia.

Healthcare stalwart CSL rose 3.5 per cent to $307

Transurban shares gained 1.7 per cent to $12.25 despite the company flagging a dramatic drop in traffic on its toll roads during March.

Supermarkets gained, with Coles up 4.4 per cent to $15.83 and Woolworths up 2.6 per cent to $36.01.

Wesfarmers gained 4.1 per cent to $35.68.

Webjet, Kathmandu and IDP Education were in trading halts after announcning capital raisings to strengthen their balance sheets.

Sydney-based Genetic Signatures Limited gained 12.3 per cent after its COVID-19 diagnostic test received regulatory approval in Europe, with Australian approval expected soon.

The Australian dollar was buying 60.80 US cents, down from 61.90 US cents as the market closed on Monday.


* The benchmark S&P/ASX200 index finished on Wednesday up 181.8 points, or 3.58 per cent, at 5,258.6 points

* The All Ordinaries closed up 180.1 points, or 3.52 per cent, at 5,290.7 points

* At 1729 AEDT, the SPI200 futures index was down 65 points, or 1.23 per cent, at 5,160 points


One Australian dollar buys:

* 60.80 US cents, from 61.90 US cents on Tuesday

* 65.32 Japanese yen, from 67.04 yen

* 55.26 euro cents, from 56.21 cents

* 49.18 British pence, from 50.16 pence

* 102.78 NZ cents, from 102.76 cents.


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