ASX 200 Weekly: Coronavirus fears wipe out year’s gains on ASX

The Australian Stock Exchange has fallen dramatically this morning, after the impact of the novel coronavirus COVID-19 on international trade and supply chains led to a sharp decline in markets last week. The ASX ended the week at 6,508 points, down almost 10%, to wipe out all the year’s gains.

The ASX continued to slide after markets opened this morning, after figures coming out of China – the epicentre of the epidemic – on the weekend showed that industrial activity had fallen there. At 10.15 AEDT this morning, the ASX 200 was down 2.18%, and the broader All Ordinaries had dropped by 2.26%, but had recovered somewhat by noon to tip over the 6,300 points mark for the ASX 200 and was just shy of 6,400 for the All Ords.

Today’s sharemarket slide follows more falls on Wall Street on Friday. The US is suffering its biggest share market declines since the global financial crisis.

The novel coronavirus outbreaks continue to cause global gloom.

After the revelations of outbreaks in South Korea, Iran, Italy and Brazil last week, the Australian Government activated its emergency response plan on Thursday, stating “the risk of global pandemic is very much upon us.”

The market continued to plummet, wiping out all gains of January and February, when it broke records repeatedly.

When the ASX tumbled last Monday, 93% of stocks lost value, and it was largely the “safe haven” shares including gold that improved.

The benchmark ASX 200 ended the week down 9.78%, while the wider All-Ords fell almost 10%.

Tomorrow the Reserve Bank of Australia board will get together to make its monthly decision on interest rates.

On Friday, most economists didn’t believe the official cash rate would budge from its current level of 0.75%. However, speculation over the weekend was intense, with many commentators declaring today that a rate rise is on the cards, as well as government-led stimulus.

A raft of data about the Australian economy is also due this week, from information about manufacturing and company profits, to home-building and jobs data.

This will all feed into confidence, or a lack of it, about the economy.

ASX 200 and All Ords Movements (21/02/2020 to 28/02/2020)
Closing Points % Change
S&P/ASX 200 (XJO) 6,441 -9.78%
All Ordinaries (XAO) 6,508 -9.99%
Prepared by Canstar. Points taken as of Monday open to Friday close.

Travel and energy companies take a dive, as every sector falls

With the widespread losses across the market last week, most of the big names lost value.

Airlines Qantas (QAN) and Air New Zealand (AIZ), and travel agencies Flight Centre (FLT) and Webjet (WEB) all nosedived.

Virgin Australia (VAH) made its half-year profit announcement – a loss of nearly $100 million – and said it would cut services in the Tiger brand.

It ended the week at 10c per share, one-fifth of its price compared to five years ago.

The energy sector plummeted on the news of the pandemic, closing the week down 12.85%.

Mining giant BHP (BHP) lost more than 13% and shed more than $14 billion in its market capitalisation.

IT stocks took the biggest hit – losing nearly 14% on average – with Wisetech Global leading those falls, again on concerns around the potential pandemic.

Australia’s biggest companies lost the most value, with the Commonwealth Bank (CBA) shedding more than the market average at 10.4%.

Other big banks Westpac (WBC) and the National Australia Bank (NAB) also suffered declines (7.8% and 8% respectively), while vaccine maker CSL lost 7.1%.

Companies adding market capitalisation gains added a total amount of less than $2 billion to the ASX’s value, highlighting the small gains made last week.

The small list of winners did include A2 Milk (A2M). It announced that despite the Covid19 outbreaks across China, sales of its baby-milk formula were strong. It revealed a strong increase in half-yearly profit.

Sector Movements (21/02/2020 to 28/02/2020)
Closing Points % Change
Consumer Discretionary (XDJ) 2,532 -11.89%
Consumer Staples (XSJ) 12,211 -9.38%
Energy (XEJ) 9,479 -12.85%
Financials (XFJ) 5,904 -9.08%
Health Care (XHJ) 43,817 -8.57%
Industrials (XNJ) 6,488 -10.26%
Information Technology (XIJ) 1,288 -13.88%
Materials (XMJ) 12,391 -10.70%
Telecommunication Service (XTJ) 1,224 -8.79%
Utilities (XUJ) 7,833 -6.50%
Prepared by Canstar. Points taken as of Monday open to Friday close.


 InvoCare and Chorus among the rare gains

In keeping with the theme of gloominess, funerals business InvoCare (IVC) was one of the few companies to defy the widespread ASX falls.

Its price rose almost 10% to end the week at $14.50.

The push for this increase was its release of positive half-yearly results.

Kiwi telco Chorus Limited (CNU) also gained market value on its announcement of its half-yearly results, which showed an 4% increase in operating performance (EBITDA).

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