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Volatility remains the key theme for the Aussie market with another big swing on the open this morning following a 3% rally yesterday and strong showing on Wall Street. The ASX 200 was tipped for a better start but has since fallen to be 94 points or 1.58% lower at 5845 as investors await announcements of fiscal stimulus, which could include tax breaks and support for industries affected most by the coronavirus outbreak. Nearly every sector on the local market is now back in the red.

Leading declines has been the financials with the big four banks easing between 2.6% and 3.6%. The deputy governor of the RBA, Guy Debelle, gave a speech this morning that the central bank could look at unconventional monetary policy after it exhausts its cuts to official interest rates. This could include buying government bonds to keep yields low. All this would squeeze bank margins and weigh on profitability, but Dr Debelle noted that those actions would support the Australian economy and hence support bank’s credit quality.

Mining stocks are also falling sharply. For the miners, the main weight is not coming from the major bulk commodity miners such as BHP Group (BHP), Rio Tinto (RIO) or Fortescue (FMG), but gold miners. Australia’s largest listed gold producer, Newcrest (NCM) is sliding 7.2% as it lowers FY20 gold production guidance by roughly 11-13% from previous estimates. This is mainly due to issues at its Lihir gold mine in PNG. Elsewhere, Evolution Mining (EVN) is down 7% while Saracen (SAR) is 6.5% softer and Northern Star (NST) is 4% lower.

Consumer names are also declining with supermarket giant Woolworths (WOW) losing 3.5% and Treasury Wine
Estates (TWE), which owns brands such as Penfolds & Wolf Blass, is 5.5% weaker. National carrier, Qantas (QAN) is down 7%, having rallied a similar percentage yesterday. A number of travel businesses have also decided to suspend or withdraw previously provided earnings guidance for the current financial year. This includes Webjet (WEB) which is mostly flat and Helloworld Travel (HLO) which is easing 2.2%.

The Aussie dollar remains near 65 US cents but has recovered from lows during US trade overnight, as home loan values rose but consumer confidence fell to five year lows. So far, 1.5b units have traded worth $4.5b with 532 stocks higher, 508 lower and 252 unchanged.

Published by CommSec