Shares pick up after panic

AUSTRALIA’S turbulent sharemarket has rebounded, finishing more than 3 per cent higher in a dramatic recovery from early panic selling.

The benchmark S&P/ ASX200 index closed up 179 points, or 3.11 per cent, at 5939.6 points – despite plunging 3.8 per cent just after it opened. The broader All Ordinaries index finished up 173.4 points, or 2.98 per cent, at 5995.8.

In percentage terms it was the ASX’s best day since a 3.34 per cent jump on November 10, 2016, following Donald Trump’s election.

But no one was celebrating, given that it came just a day after the second worst session in ASX history, a 455.7-point, 7.33 per cent crash.

“I think the big story is exhaustion from a few days of tumultuous selling,” said Betashares chief economist David Bassanese. “I don’t think we’ve found a bottom,” he added, noting there were likely more coronavirus cases to be detected in the US. “It could just be a temporary reprieve.”

CommSec analyst James Tao says it clawed back some ground in morning trade after Mr Trump announced a stimulus package to help US businesses overcome the virus impact.

“The stimulus plan boosted confidence a little, ” he said.

Then the market rallied just after noon, as Chinese markets began to open higher buoyed by a new wave of confidence, he said.

Yesterday’s local rise could be a combination of factors including a swell of optimism, buying in a dip, or a dead cat bounce – the latter a very technical term for a temporary recovery in share prices after a huge fall. The spreading coronavirus and an oil price war between Saudi Arabia and Russia are still adding to disruption, Mr Tao said.

Every sector rose except utilities and property.

Although battered, banking rose most, by 4.7 per cent, with tech stocks close behind.

Commonwealth Bank gained 6.1 per cent to $73.37, ANZ rose 4.2 per cent to $21.13, NAB climbed 4.8 per cent to $21.10 and Westpac added 5.2 per cent to $20.54.

Macquarie was up 4.2 per cent to $126.55.

Among the major miners, BHP added 6.2 per cent to $29.25, Rio Tinto gained 3.5 per cent to $83.61 and Fortescue Metals rose 6.8 per cent to $9.16. Goldminers were mostly down as the price of the precious metal dipped one per cent to around $US1660 an ounce.

Newcrest dipped 2.3 per cent and Northern Star 3.7 per cent, although Evolution was up 1.2 per cent.

With the price of Brent crude hovering around $US33 a barrel – down from around the $US50 mark at the start of the month – the energy sector bounced back from a mammoth 20 per cent drubbing it took on Monday, gaining 3.4 per cent.