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Aussie shares are bouncing back from yesterday’s slump, with the ASX 200 lifting by 37pts or 0.55 per cent to 7031.4 thanks to solid gains across most sectors. While this is enough to recoup around two thirds of Tuesday’s losses, the market has lost momentum over the past week due to the coronavirus. The virus is reported to have killed over 130 people in China.

Airports, airlines, travel agents and casinos are mostly higher today, however have slumped by close to 10 per cent on average over the past week due to concerns of lower travel demand. Around 120,000 Chinese tourists visit Australia each month. Should the coronavirus worsen further, it could have an impact on spending. Keep in mind that the Aussie market is still up by ~5 per cent in January, making it the best month since February 2019. Markets did initially dip during the SARS virus in early 2003, but were quick to recover.

Around 85 per cent of stocks are higher today, with gains across almost all sectors. Only around 25 companies on the ASX 200 are in negative territory and most of them are gold producers. Evolution Mining (EVN) and Regis Resources (RRL) are under pressure despite both gold miners reiterating their goals for the year.

Oz Minerals (OZL) is up by 2 per cent after posting a lift in copper and gold production over the 4Q19, while announcing a bigger than expected 26 per cent drop in costs.

Treasury Wine Estates (TWE) is slumping by 20 per cent. The owner of Penfolds and Wolf Blass cut its 2020 profit expectations significantly this morning due to a challenging American wine market. TWE expects EBITS to grow by 5-10 per cent (previously 15-20 per cent). Some US wine suppliers are offloading excess stock at lower prices, hurting demand for its products.

Consumer inflation over the December quarter was a touch stronger than expected, with CPI up 0.7 per cent (consensus 0.6 per cent) and 1.8 per cent over the year. The data pushed the Australian dollar a little higher this morning and further
reduced the market’s pricing of a rate cut by the Reserve Bank next Tuesday. According to Bloomberg, the market is pricing in a 10 per cent chance of a February rate cut (24 per cent prior to the CPI read).

1.3bn shares have changed hands so far today worth $2.9bn. 645 stocks are up, 399 are down and 337 are unchanged.

Published by CommSec