Market defies gloom on wave of optimism

AUSTRALIA’S benchmark share index has broken through the 6000-point mark for the first time since the coronavirus pandemic up-ended economies across the globe.

The ASX 200 hit an intraday high of 6034.4 points in early trade yesterday.

It gave up some of those gains in later trade, ending just below 6000 points at 5991.8, but still with a gain of 0.8 per cent for the session.

The ASX200 has risen 4.1 per cent this week putting it on track for its sixth consecutive weekly rise.

Its brief breach of the 6000point level was fuelled by a rush on financial and technology stocks and came just a day after Federal Treasurer Josh Frydenberg declared the nation in recession for the first time in almost three decades.

It also came after the Government unveiled its $680 million HomeBuilder grants program.

Shares in the big four banks all rose as the Commonwealth Bank, the nation’s biggest mortgage lender, gained 2.3 per cent to $67.66.

Burman Invest chief investment officer Julia Lee said the lifting of shutdown measures and sweeping central bank and government support were lifting the mood of investors.

Confidence was also growing that a second COVID-19 outbreak could be handled without another nationwide lockdown, Ms Lee said.

“The speed of the recovery has been surprising, but then again the speed of the fall also surprised,” she said.

Ms Burman remained cautious on the outlook for Australian stocks, noting that companies in the ASX 200 were expected on average to log a 14 per cent drop in earnings this financial year and another 3 per cent next year.

The ASX 200 hit a record high close of 7162.5 points on February 20.

It then plunged 36.5 per cent as the pandemic developed to a closing low of 4546 points on March 23.

Also yesterday, investors digested a retail sector update that confirmed sales fell by the most on record in April.

The Australian Bureau of Statistics marginally revised its preliminary estimates of retail trade for April, saying sales fell by 17.7 per cent from March, instead of 17.9 per cent.

Sales had jumped a record 8.5 per cent in March as households stockpiled goods.

Separate numbers from the ABS show the trade surplus eased in April to $8.8 billion, seasonally adjusted.