ASX 200 & Coronavirus: Uncertainty tears through the Australian stock market

Economic and trade impacts of the COVID-19 pandemic are deepening, as the spread of the respiratory virus escalates.
big four banks pass on July 2019 cash rate cut
Source: Vitalii Tairov, Canstar.

Gatherings of more than 500 people are banned from today in Australia as a growing number of companies opt to close offices or enforce remote work. The ramifications for businesses and trade are already starting to hit hard.

The international response – and an oil price war between Saudi Arabia and Russia – have led to huge swings on the Australian Securities Exchange (ASX) and other international markets in recent times.

Last week, steep falls hit travel stocks such as Flight Centre, Qantas and Virgin airlines, as well as energy companies Oil Search, Woodside, BHP and Rio Tinto and the big banks.

Coronavirus’ global spread tipped to continue to impact the markets

Another week of turbulence is tipped for the week ahead, after the chaos of last week. On opening this morning, the Australian Securities Exchange tumbled 7.4% as a range of companies issued warnings of short-term profit losses.

Travel stocks Flight Centre (FLT), Webjet (WEB) and Virgin Airlines (VAH) all marked double-digit declines, and Air New Zealand (AIZ) was placed in a trading halt at its request. A short time ago, the Kiwi carrier announced it would cut its long-haul international capacity “by 85% over the coming months”, in light of the “global travel restrictions” currently in place due to the coronavirus.

US markets rose sharply late on Friday, including a gain of more than 9% on the Dow Jones index, after President Donald Trump declared the virus a national emergency. It closed at around 23,186 points, still well below its peak of over 29,000 points a few weeks earlier.

Back home, the ASX 200 index fell by more than 10% (10.89%) over the week. It could have dived twice that amount if it were not for a late surge on Friday afternoon.

The wider market, the All-Ords, lost 11.08% last week.

It means the market has lost almost a quarter of its value since hitting a peak last month.

There were steep declines twice in the week. On Monday, the market fell 7.33% after news oil-producing countries would not agree to production cuts. Then on Friday morning, the Aussie market followed the US indices down, following Wall Street’s biggest one-day plunge since the 1987 crash of about 10%.

This week, the Australian market is expected to continue watching its overseas counterparts and expected interest rate cuts from China. Overnight, the US Federal Reserve slashed its official interest rate by one percentage point to a range of 0%-0.25%, while the Reserve Bank of New Zealand also trimmed its cash rate from 1% down to just 0.25% “for at least the next 12 months”.

There will also be an insight into the thoughts of Australia’s Reserve Bank leaders when the minutes of last week’s meeting are released.

S&P and All Ords Movements (06/03/2020 to 13/03/2020)
Closing Points % Change
S&P/ASX 200 (XJO) 5,539 -10.89%
All Ordinaries (XAO) 5,591 -11.08%
Prepared by Canstar. Points taken as of Monday open to Friday close.

 


Energy companies including BHP take a dive, as well as the big banks

There was not a sector unscathed in the ASX’s falls last week.

Sector Movements (06/03/2020 to 13/03/2020)
Closing Points % Change
Consumer Discretionary (XDJ) 2,217 -7.81%
Consumer Staples (XSJ) 12,038 -2.57%
Energy (XEJ) 7,210 -20.64%
Financials (XFJ) 4,721 -12.54%
Health Care (XHJ) 43,646 -1.57%
Industrials (XNJ) 5,350 -14.61%
Information Technology (XIJ) 1,093 -11.89%
Materials (XMJ) 10,499 -13.90%
Telecommunication Service (XTJ) 1,159 -7.22%
Utilities (XUJ) 7,022 -10.93%
Prepared by Canstar. Points taken as of Monday open to Friday close.

But energy stocks took a particularly large tumble (down 20.64% as a sector), given the price war between oil producers. This has led big resources companies to dive.

BHP Group lost more than $16 billion from its market value, with a 17% share price drop over the week.

ASX 200 – Top 5 Market Capitalisation Losses (06/03/2020 to 13/03/2020)
Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price
1 BHP Group Ltd -$16,113,807,125 $26.72 -17.0%
2 Commonwealth Bank -$13,400,713,068 $66.36 -10.2%
3 Westpac Banking Corp -$11,665,742,131 $18.12 -15.1%
4 National Aust. Bank -$10,586,939,022 $18.41 -16.3%
5 ANZ Banking Group Ltd -$9,472,832,589 $18.80 -15.1%
Prepared by Canstar. Prices taken as of week to week close.

Industrials were also down almost 15% (14.61%) amid lower international trade.

But most of the biggest individual weights on the ASX were, once again, the banks, with the four majors all experiencing double-digit drops.

The Commonwealth Bank (CBA) fell to $66.32, Westpac Bank (WBC) to $18.12, the National Australia Bank (NAB) to $18.41, and the ANZ to $18.80.

Since the February peak, the CBA has lost almost 30% of its share price. The NAB has shed almost 40%.

But there were some significant gains. Iron ore miner Fortescue Metals Group (FMG) gained 3.4% to grow more than $1 billion in value, after weeks of declines.

ASX 200 – Top 5 Market Capitalisation Gains (06/03/2020 to 13/03/2020)
Rank Company $ Change in Market Cap Closing Share Price % Change in Share Price
1 Fortescue Metals Group $1,016,058,423 $9.93 3.4%
2 Xero Ltd $739,988,135 $80.39 6.9%
3 Cochlear Ltd $642,490,267 $216.11 5.4%
4 Coles Group $466,875,394 $16.05 2.2%
5 Costa Group Holdings $64,126,689 $3.13 5.4%
Prepared by Canstar. Prices taken as of week to week close.

Xero, Cochlear, Costa and Coles beat the market

It was a mixed bag for positive shares last week.

Investors bought into small business software company, Xero (XRO), sending the price 6.9% higher. This followed steep falls the week before.

Medical device provider Cochlear (COH) also gained 5.4% after positive recommendations from analysts.

Food producer Costa Group (CGC), which has suffered serious price falls over the last year, and dairy Bega Cheese (BGA), which has also had extreme volatility, both grew in their value with a 5.4% and 2.2% rise, respectively.

 

ASX 200 – Top 5 Share Price Gains (06/03/2020 to 13/03/2020)
Rank Code Company Closing Share Price % Change
1 XRO Xero Ltd $80.39 6.9%
2 COH Cochlear Ltd $216.11 5.4%
3 CGC Costa Group Holdings $3.13 5.4%
4 FMG Fortescue Metals Group $9.93 3.4%
5 BGA Bega Cheese Ltd $4.56 2.2%
Prepared by Canstar. Prices taken as of week to week close.

But Ooh! Media, Webjet and Qantas prices plummet

Media advertising company Ooh! Media (OML) lost more than one third of its value in a week, amid gloomy forecasts for the media industry and wider business confidence.

Other companies to  cop staggering falls of more than 30% of their value were Gold Road Resources (GOR), debt collector Credit Corp (CCP) and travel giants Webjet (WEB) and Qantas (QAN).

Webjet withdrew its profit guidance, scrapping its previous forecasts. Qantas announced it would slash the number of routes and flights it offered in the months ahead.

ASX 200 – Top 5 Share Price Losses (06/03/2020 to 13/03/2020)
Rank Code Company Closing Share Price % Change
1 OML Ooh!Media Ltd $1.55 -35.1%
2 GOR Gold Road Res Ltd $0.94 -34.9%
3 WEB Webjet Ltd $5.54 -31.9%
4 CCP Credit Corp Group $18.80 -31.9%
5 QAN Qantas Airways $3.18 -31.8%
Prepared by Canstar. Prices taken as of week to week close.

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