$120 billion seesaw as market rebounds

THE Australian share market staged its biggest single-session rally in more than three years on a day of wild swings yesterday.

A day after suffering its worst rout since the global financial crisis in 2008, the benchmark ASX 200 index surged 3.1 per cent.

The spike followed another wave of panic selling in early trade after a dire session on Wall Street, where the Dow Jones also took its biggest dive since 2008.

In the first 11 minutes, the ASX 200 tumbled 3.8 per cent, taking to 22.7 per cent its slump since February 20 amid the sell-off triggered by concerns about the spread of coronavirus.

That means the bourse was dragged into a bear market — broadly regarded as a slide of 20 per cent or more.

However, its time there was short-lived, dramatically regaining most of its losses over the next 20 minutes and forging ahead soon after noon.

When it peaked with the closing bell, an extra $54 billion had been added to the value of the market, which recovered more than a third of the losses it had sustained on Monday.

From trough to peak yesterday, the benchmark index surged 7.2 per cent — a $120 billion turnaround.

The rally came after US President Donald Trump flagged plans for a sweeping stimulus package to help America cope with the economic fallout from the virus.

Details were due to be announced overnight in a development likely to heighten volatility on Wall Street.

It also came as oil prices, that had plunged in previous days, recovered slightly, triggering a buying spree among energy stocks.

Fitch Ratings warned that as a glut loomed, the oil market remained a key point of vulnerability.

At the weekend, Saudi Arabia said it would lift production — sending prices spiralling downward — after talks with Russia about proposed output cuts collapsed.

“The economic effects of an oil shock may be longer lasting that those from COVID-19,” Fitch said in a research report.

In a report for investors, stockbroker Shaw and Partners said all “historical measures of fear are at maximum levels, suggesting capitulation by some market participants”.