Steady as she goes as ASX posts +1.9% climb after RBA decision

August 4, 2020 - 2 months ago
Share on twitter
Share on facebook
Share on linkedin
Share on email

The Australian share market rebounds on Wall Street gains on Tuesday and “sails out into the sunset” after posting a +1.9% rise to an intraday high of 6059.50, taking back almost all of the ground lost in the last two sessions.

At the closing bell, the benchmark S&P/ASX 200 Index rose +111.5 points, to end the session at 6,037.6.

The broader All Ordinaries index chalked up a healthy gain of +112.60 points or +1.86% to 6,166.50 points.

As widely expected, the Reserve Bank of Australia has kept the official cash rate on hold at a historic low of 0.25 per cent and maintained its 3-year bond yield target of 0.25 per cent also.

Despite the Victorian Government imposing stage 4 restrictions across Melbourne on the weekend to contain the second wave of COVID-19 infections, the Reserve Bank board has chosen to keep interest rates on hold.

Last month, Reserve Bank governor Philip Lowe raised the prospect of cutting rates further if necessary, perhaps to 0.1 per cent, but the board held off on taking further action at today’s meeting.

In today’s post-meeting statement, RBA governor Lowe said while Australia is experiencing its biggest economic contraction since the 1930s, things are not as severe as initially expected and “recovery is now underway in most of Australia”.

“This recovery is, however, likely to be both uneven and bumpy, with the coronavirus outbreak in Victoria having a major effect on the Victorian economy,” he added.

Lowe went on to say the RBA’s latest forecasts were for the official unemployment rate to rise to around 10% by the end of the year “due to further job losses in Victoria and more people elsewhere in Australia looking for jobs.”

Over the following couple of years, the unemployment rate will likely decline gradually to around 7%, he added.

The official unemployment rate is currently 7.4%.

All 11 sectors closed in positive territory, with the S&P/ASX All Technology index climbing +2.5% as the buy now, pay later providers further advancement.

Afterpay added +6.5% to $70.80, with NextDC also closing at a record high, adding +3.6% to close at $12.01, meanwhile, Appen Limited added +1.96% to $37.50, with EML payments climbing +4.07% to $3.07 and Computershare rising +3.2% to $13.88.

The gold miners were among the rare disappointments on the day as the precious metal retreated from the recently posted record highs with Evolution Mining falling -2.80% to $5.90, Resolute Mining slipping -0.37% to $1.35, Newcrest Mining also slipped -0.14% to $35.60, and Saracen tumbled -2.41% to $6.08.

For the big miners, iron ore titans provided some support, with BHP added +1.55% to $37.92, with Rio Tinto adding +2.4% to close at $105.10, while Fortescue Metals Group set another record higher ($18.64) after climbing +1.6% to $18.16 and LYC added +5.58% to $2.46.

The banks recovered some of Monday’s steep declines, with the ‘Fab Four’ (banks), ending positive territory as the Commonwealth Bank climbed +2.25% to $71.50, while Westpac Banking Corp rose +1.82% to $16.79, Australia and New Zealand Banking Group advanced +1.68% to $17.51, and National Australia Bank added +1.18% to $17.14.

Macquarie Group rose +2.66% to $125.24, and Bendigo & Adelaide Bank added +3.20% to $6.77. AMP was lost -1.02% to $1.45.

Medical stocks were also firmer with biotechnology giant CSL advanced +2.17% to $283.16, while Cochlear Limited slipped -0.51% to $197.88, Ramsay Health Care added +2.09% to $63.96, Fisher & Paykel H. advanced +2.5% to $34.42, Sonic Healthcare rose +2.46% to a record close of $33.30 and Mesoblast surged +7.01% to $4.12.

Openpay Group shares closed +20.3% higher at $3.91 after telling investors its payment service would be offered to golf club operators through a partnership with enterprise software company MSL Solutions.

Meanwhile, Zip Co surged +8.84% to $6.28, Sezzle shares cooked a +8.3% rise to $7.20.

In a notice to investors after market close on Tuesday, Woolworths said it would shut 22 of its Big W department stores in metropolitan Melbourne and is seeking additional clarification regarding its supermarket meat supply chains following the Victorian government’s stage four restrictions but would keep open nine regional stores under stage three restrictions.

Three of the company’s 80 pubs under its ALH division would also be shut due to the regional restrictions, with all of Woolworths’ Victorian pubs now temporarily shut down due to the coronavirus.

Woolworths shares outperformed the rest of the market with a +2.3% gain to a four-month high of $39.92.

Supermarket peer Coles Group reached an all-time high of $18.91, taking its market capitalisation above $25 billion for the first time.

The restrictions will also force several listed retailers to close their Melbourne stores, including Wesfarmers’ Kmart and Target outlets; Premier Investments’ Just Jeans and Portmans; and JB Hi-Fi.

And while shares in JB Hi-Fi closed -1.2% lower to $44.08, Premier Investments shares climbed +1.7% to $16.36, and Wesfarmers shares eked out a +0.9% gain, taking them to $46.29.

Baby Bunting, as well as building materials supplier Adbri, told investors that their operations in the Melbourne area would continue.

Baby Bunting shares rose +4.3% to $3.62 and Adbri added +1.8% to $2.25.

There were new intraday record highs for online retailer Kogan advanced +3.34% to $18.86 and appliance maker Breville added +2.50% to $26.27.

Our local currency, the Australian dollar, is currently buying US$0.7142 (as of writing).

Looking ahead we still have the Bank of England (BOE) Monetary Policy, with the more closely followed Non-Farm Payrolls (NFP) report from the Labour Department which will offer another look at the U.S. employment picture.

Share on twitter
Share on facebook
Share on linkedin
Share on email

Leave a Reply