Lingering coronavirus fears curbed an early rally in Australian equities on Thursday, seeing the local market significantly underperform gains on Wall Street, which was boosted by a strong performance from moderate Democratic presidential candidate Joe Biden in the “Super Tuesday” primaries.
The benchmark S&P/ASX 200 rose 70.3 points, or 1.1 per cent, to 6395.7, finishing well off the high of 6447.1 hit earlier in the session. Despite closing in positive territory, it was a weak performance compared to that seen in the US where all major indices posted gains in excess of 3.9 per cent on Wednesday.
Increased reports of confirmed coronavirus cases across the region, raising the potential for further economic disruption, may have contributed to the lacklustre performance.
Early gains were slowly whittled away on the ASX on Thursday.Credit:AAP
“Market reaction to coronavirus is volatile as investors grapple with how long and widespread the impact will be,” said Dermot Ryan, a portfolio manager at AMP Capital. “We are probably not yet at ‘peak panic’ and markets are still behind the curve in the short-term.”
All sectors finished higher for the session, led by healthcare, REITs and communications stocks, which all posted gains in excess of 2.3 per cent.
While they benefited from continued pressure on Australian bond yields, it had the opposite affect on banking stocks, with financials lagging the broader market with a paltry gain of 0.5 per cent.
Mining companies were hindered by BHP and Rio Tinto going ex-dividend [trading for the first time without the rights to their latest dividends]. The sector ended the session up 0.3 per cent.
TPG Telecom was the top-performer on the benchmark index, soaring 9.6 per cent to $8.25 on news the ACCC will not attempt again to halt its merger with Vodafone Hutchison Australia.
With rain falling across many parts of eastern Australia, Elders and Graincorp shares also enjoyed strong gains, jumping 8.5 per cent and 5.8 per cent, respectively, to $8.59 and $8.20.
Fortescue Metals continued its rebound, rallying a further 5.2 per cent to $10.05 on the back of strong gains in iron ore prices on Wednesday.
In contrast, shares in Corporate Travel Management tumbled 7.5 per cent to $11.35, hit by profit taking after the stock went ex-dividend and amid news Australia had extended existing travel bans to include South Korea.
Flight Centre shares also nosedived to fresh three-year lows, closing down 5 per cent at $28.52.
Online lottery retailer Jumbo Interactive was also slammed after trading ex-dividend, sliding 7.7 per cent to $9.88.
David Scutt covers markets for The Sydney Morning Herald and The Age