Monday, March 30, 2020

The Stocks That Won Today Amid a Global Selloff

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What’s happening: Australian stocks spiked today to record their strongest single day rise in decades, despite the ongoing coronavirus outbreak and bruising selloffs in the global equity markets.

What happened: Australia’s benchmark ASX 200 index recorded a surprise surge of 7% today, after losing 28% of its historic high reached on February 20. Australian markets were boosted by Prime Minister Scott Morrison announcement of a third massive package to prevent mass layoffs. The Australian government had already announced two earlier packages worth around $70 billion

Why it matters: PM Morrison disclosed a $130 billion plan, which includes a fortnightly job keeper payment of $1,500 to employees. The payment plan is expected to prevent companies from firing workers amid factory and store closures. The amount will be paid to all employees, whether they are full-time or part-time employees, provided they have been employed for at least a year.

More than 720,000 coronavirus cases have been reported globally and the death toll has reached 34,000, according to data compiled by Johns Hopkins University. Australia now has more than 4,100 COVID-19 cases, including 17 deaths. Despite the health crisis, global equity markets recovered last week with governments and central banks around the world pumping massive amounts of money into their economies to reduce the blow from the coronavirus outbreak.

The ASX 200 index spiked 7% higher to 5,181, while the broader All Ordinaries index rose 6.6% to settle at 5,194 points today. The Australian dollar declined versus the greenback to 61.46 cents.

Healthcare and consumer staples were the top performing sectors today. Shares of Ansell jumped around 25% after the company reaffirmed its full-year profit outlook at a time when a majority of firms have withdrawn their guidance.

Banking shares also made a recovery today after posting strong declines in recent weeks. Shares of ANZ, Westpac and Commonwealth Bank all soared more than 7%. However, shares of furniture firm Nick Scali slipped around 3% after the company announced plans to temporarily shut its business down.

What to watch: Investors will be keeping an eye on further details on the PM’s coronavirus package. Markets also await data on Australia's new homes sales and private sector credit, due for release tomorrow.

The Markets Today

     

US stocks will be in focus today, with the country reporting a massive increase in coronavirus cases.

Context: US stocks closed lower on Friday, as the approval by Congress of the mammoth coronavirus stimulus package failed to lift investor sentiment. For the week, however, most stocks posted gains, recovering some of the steep losses recorded this month

Details: The Dow moved lower on Friday, after recording the strongest three-day rise since 1931 on Thursday. Despite Friday’s downturn, the Dow recorded an impressive 12.8% weekly increase, representing its best week since 1938. The House of Representatives approved a $2 trillion stimulus package on Friday, with President Donald Trump signing the legislation into law.

The Dow tumbled over 900 points to settle at 21,636.78 on Friday. The S&P 500 index declined 3.4% to 2,541.47, while the Nasdaq 100 slipped 3.8% to end the trading day at 7,502.38.

Last week’s rebound in the US stock market was driven by the country’s stimulus plan and the Fed’s monetary policy easing announcement. However, there could be significant pressure on equities in coming weeks, as coronavirus cases and deaths are continuing to rise in the US and economic reports are likely to depict the impact of lockdown in various parts of the country.

The US has become the epicentre of COVID-19, reporting more cases than China. The country has over 143,000 confirmed cases of the disease, versus around 82,100 in China. On Sunday, President Donald Trump announced an extension of the social distancing guidelines till April 30 to control the country’s death toll.

In economic news, consumer spending rose 0.2% in February, while the final reading of the University of Michigan’s consumer sentiment index dipped to 89.1 in March. Meanwhile, the yield on the 10-year US treasury note fell 13.3 basis points to trade at 0.679%, while WTI crude tumbled 4.8% to $21.51 on the NYMEX.

What to watch: US stocks are expected to extend Friday’s downward momentum today, with the country reporting a strong rise in daily coronavirus cases. US stock futures are also pointing towards a lower open on Wall Street. Investors will look out for economic reports from the country today. The US pending home sales, which rose 5.7% in January, is expected to rise 1.7% in February. The Dallas Fed manufacturing index is also due today.

Other Market: European indices were trading lower at 9:00am GMT, with the FTSE 100, German 30 and French 40 down 2%, 1.4% and 2.6%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

News shaping
the markets today

     

What else to watch today

     

Germany’s inflation rate, South Africa’s balance of trade, Brazil’s federal tax revenues, consumer confidence and consumer confidence and Argentina’s economic activity index.