The Aussie market is lifting at lunch on Wednesday as it continues to rebound from the heavy declines yesterday. The ASX 200 is up by 89 points or 1.5% to 6,042 around midday. Yesterday, the index lost 107 points or 1.8%. Further strength on US markets overnight gave local shares a strong lead this morning.
Some of the biggest news this morning has been on the economic front with the release of the June quarter GDP figures which showed the economy contracted by more than the market expected at 7% for the quarter. This is the second consecutive quarterly contraction which signals the first recession in nearly 30 years. This recession has been brought about from the COVID-19 pandemic and its crippling effect on household spending and consumption due to forced shutdowns. While it hasn’t had much of a negative impact on equities, the AUD has weakened and is now buying 73.52 US cents, having hit a low of 73.36 US.
Equity improvements have been broad based as all sectors advance in the first few hours of trade. The biggest improvements have been among the materials, industrials, communications and utilities. The energy sector is slightly lagging behind with the small gains so far.
Individually, the major miners are making the biggest difference for broader gains. Both BHP Group (BHP) and Fortescue Metals (FMG) are more than 3% higher with BHP up 3.2% and FMG lifting 3.8%. Rio Tinto (RIO) is also climbing 2.3%. Commonwealth Bank (CBA), Woolworths (WOW) and CSL Ltd (CSL) are the other big names among the big contributors to the market’s rise.
There are still some losses with the main weakness coming from gold miners and buy-now pay-later (BNPL) providers. The BNPL stocks have fallen sharply again after news in recent days that the payment provider PayPal is looking to start instalment payment features for customers in the US. Afterpay, the largest listed BNPL stock, was down 12.4% at the lows this morning but has since recovered to be 2% lower. ZipCo (Z1P) is falling hardest with a decline of 11%. Wealth manager, IOOF (IFL) is sliding 14% after resuming trade as it raises capital to fund its acquisition of wealth management business MLC from National Bank (NAB).
So far, 3.2b units have traded worth $3.7b with 689 stocks higher, 505 weaker and 341 unchanged.
Published by CommSec