Hopes of stimulus through interest rate cuts and other methods have helped drive global markets, including the Aussie market, higher. The ASX 200 has rallied 122 points or 1.92% to 6514 at midday, making it’s the first gain in eight trading sessions. Lower rates are seen to help mitigate the potential economic hit to the global economy from the spread of coronavirus (COVID-19). Despite today’s gains so far, the index is still well away from recovering the roughly 10% decline over the previous seven trading days.
The market is fully pricing in and expecting an interest rate cut of 0.25% at this afternoon’s RBA meeting. This would bring the official cash rate to a new historic low of 0.5% after the RBA cut rates three times in 2019. The Aussie dollar is hovering around 65.4 US cents. There is plenty of talk that other central banks around the world, including Japan, US and UK will also consider lower interest rates to boost their respective economies.
Local shares have also been boosted by a strong lead from Wall Street where the Dow Jones Industrial Average had its best daily gain since 2009, surging 1,293 points or 5.1% in a session. Other major US indices jumped at least 4%. Still markets remain volatile with major swings as investors digest headlines and potential central bank action.
Every sector is improving at lunch on the ASX with the tech, healthcare and materials experiencing the best percentage gains. The tech sector is being bolstered by big jumps for Afterpay (APT), which is 6.5% higher while accounting software company, Xero (XRO) is lifting 7%. Biotech firm, CSL Ltd (CSL) is helping push healthcare names higher with a gain of 2.8% while ResMed (RMD) jumps 5.5%. Major miners are rallying between 3% 5%, Fortescue Metals (FMG) is the big improver for the miners after slumping nearly 10% yesterday.
One of the main sources of weakness for stocks has been the fact that a number of companies are trading exdividend today. Power operator, Spark Infrastructure (SKI) is 2.1% weaker as it trades ex-dividend. Health insurer, Medibank Private (MPL) is easing 0.2% for the same reason. Elsewhere, Ansell (ANN) is down 1.5% and Wisetech Global (WTC) is 0.1% softer.
So far, 1.5b units have traded worth $4.2b with 989 stocks higher, 179 lower and 220 unchanged.
Published by CommSec