Aussie shares are sliding at lunch, with the ASX 200 slumping by 82pts or 1.6 per cent to 4,874 and hovering around a four-year low. Markets remain volatile and under pressure due to the continued spread of the coronavirus and its impact on the global economy. The ASX 200 briefly fell below Friday’s low of 4873 and leaves the market on track for its fourth weekly decline.
There have been plenty of announcements from global central banks and governments so far today. This includes the Bank of England saying it’s prepared to pump unlimited amounts of money into its financial system, the European Central Bank announced a €750bn pandemic purchase program, the U.S. Senate approved a bill to help people on unpaid sick leave and to make sure coronavirus tests are free.
The latest monthly employment report was released this morning and was above market expectations. Employment rose by 26,700 in February (consensus 6,700), while the unemployment rate fell from 5.3 per cent to 5.1 per cent (consensus 5.3 per cent). The economic impact of COVID-19 will likely have a negative impact on the labour market in coming months.
The RBA will hold an emergency meeting at 2:30pm AEDT. The market expects a 25bps rate cut. This will be followed by an address by RBA Governor Lowe who is expected to announce further policy measures to support the financial system at 4pm.
The market is mostly lower at lunch, with the exception of a few pockets of gains. Fortescue (FMG) and Rio Tinto (RIO) are improving, supermarket chains like Coles (COL) and Woolworths (WOW) are lifting and utilities like APA and ALG are also higher.
Energy stocks are slumping ~6 per cent following a 24 per cent decline in oil prices overnight (18-year low). Two reason for the oil price slump is Saudi Arabia and Russia’s price war and the reduced demand due to the coronavirus outbreak.
Qantas (QAN) is down 11 per cent after saying 20,000 of its 30,000 employees will be temporarily stood down to preserve jobs long term. QAN decided to defer its next dividend until September. QAN has cut all international flights (as required by the Federal Government). Webjet (WEB) entered a halt ahead of a capital raising. Flight Centre (FLT) is down an additional 30 per cent.
Adairs (ADH) is down 26 per cent. The retailer has withdrawn its earnings guidance for the year due to the unpredictability of the coronavirus’ impact on spending. ADH will not pay investors an interim dividend of 7c in a bid to maintain strong liquidity.
Myer (MYR) is down 23 per cent as the coronavirus impacts foot traffic and spending at department stores. Both BlueScope (BSL) and Nine Entertainment (NEC) have withdrawn their guidance.
2.5bn shares have changed hands so far today worth a very heavy $7.4bn. 244 stocks are up, 905 down and 236 are flat.
Published by CommSec