Monday morning saw a flurry of central bank actions aimed restoring order in global financial markets as participants globally continue to weigh the economic impact of the COVID 19 virus. Early Asian trade saw emergency decisions from a number of central banks including. The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank which all announced coordinated action aimed maintain the orderly operation of financial markets globally. The Reserve Bank of Australia issued a statement highlighting it readiness to support the market saying it ‘stands ready to purchase Australian government bonds in the secondary market to support the smooth functioning of that market, which is a key pricing benchmark for the Australian financial system. The Bank will announce further policy measures to support the Australian economy on Thursday.’
The decisions taken by the central banks failed to dent the resolve of sellers resulting in the ASX 200 falling by 7.4% at the start of trade. In the latter part of the morning, the market had consolidated and was able to make a modest recovery from its lows. Recovery notwithstanding, the Index remained 5% lower at lunchtime.
Each ASX sub-index was substantially lower at lunchtime with the exception of Consumer Staples, which was ahead by a small margin, reflecting gains for shares in supermarket operators Coles (COL), +2.2% or 35 cents at $16.39 and Woolworths (WOW) +3% or $1.12. Industrials fell the most; Transurban (TCL) down 7.7% or $1.02 at $12.00, Sydney Airports (SYD) 13% or 80 cents lower at $5.00 weighed down by the prospect of a moderating global and local economy. Consumer Discretionary; Aristrocrat Leisure (ALL) down $3.71 or 13% at $24.21, Energy; Oilsearch (OSH) down 13% or 45 cents at $3.02, while Financials were also substantial weights on the Index with all of the big four lenders down between 6% and 8%. Turnover was more modest compared to recent days that have seen the market retreat. At lunch, shares valued at $4.2 billion had changed hands after 1.7 billion transactions were measured by the ASX. 225 stocks were higher, 888 were higher and 258 were unchanged.
Shares in annuity provider Challenger Limited (CGF) were lower by 12% or 78 cents at $5.86 after the group narrowed its FY20 normalised net profit before tax guidance. Previously CGF expected the measure to be at the top end of a $500 million to $550 million. Challenger adjusted that by returning to its original guidance range of normalised net profit before tax of between $500 million and $550 million for FY20 to allow in light of current market volatility.
Shares in casino operator Crown Resorts (CWN) were 11% or 91 cents lower at $7.31 after announcing it will apply social distancing measures in response to the Covid-19 pandemic. The measures will include the deactivation of every second gaming machine and electronic table games; distancing between players, and restricting player numbers and those of patrons in food & beverage facilities.
Cochlear (COH) shares plunged after lowering its earnings guidance as hospitals in its major markets of the US and western Europe cancel surgeries for hearing implants. COH expects significant declines in sales in the immediate future The group said ‘there is a high level of uncertainty surrounding the impact of COVID-19 in terms of the extent and duration of the reduction in surgeries….as a result, we are not in a position to provide an earnings outlook to the market at this time and withdraw our earnings guidance for FY20. An update on trading conditions will be provided when appropriate’.
Collins Foods (CKF) announced that its KFC restaurants in the Netherlands will not be able to operate as normal after the Dutch Government announced overnight that, amongst other measurements, all restaurants must close immediately until 6 April. The fast food provider said that the situation is moving quickly, and will keep the market informed accordingly. Collins Foods (CKF) shares were $1.23 or 20% lower at lunch at $4.73.
The Australian dollar has traded through a broad range over the day so far reflecting the intervention of central banks. At the peak of morning trade the local unit was at 63.04 US cents , before plunging as low as 60.96 US cents – a short time ago the local unit was at 61.46 US cents.
Published by CommSec