Australian shares have rallied for a third straight day after a massive US stimulus deal sent global markets soaring.
The S&P/ASX200 benchmark index finished Thursday up 115.2 points, or 2.3 per cent at 5,113.3, while the All Ordinaries index closed up 129 points, or 2.58 per cent, at 5,135.2 points with all sectors higher.
Markets around the world were higher after the US Senate passed an unprecedented $A3.3 trillion emergency aid bill to try and save the world’s largest econony.
“The optimism around that, a bit of a relief rally going on, in particular in the tech sector,” said Burman Invest chief investment officer Julia Lee.
The technology sector gained 7.4 per cent, with Afterpay soaring 29.4 per cent to $29.40.
Genworth Mortgage gained 22 per cent and Star Entertainment Group climbed 21.0 per cent.
Given the economic crisis, all three companies are not expected to do well in the short term but Ms Lee said traders may have overplayed their hand.
“I’d say there’s an element of short covering going on in the market today,” she said.
Short covering occurs when traders bet a stock will fall and it instead rises, so they are forced to buy it to cut their losses, pushing the price up further.
Ms Lee said the three days of gains hardly meant that the downturn was over.
Relief rallies are normal during bear markets and they tend to be severe and shallow, she said.
“Big up moves aren’t a sign of a healthy market,” she said.
“You can’t say that earnings are driving the market, because earnings are so clouded.”
Indeed there was another string of Covid-19 job losses and more companies withdrew earnings guidance.
Virgin Australia gained 17.9 per cent to 8.3 cents after it said redundancies would top 1,000 while Flight Centre was untraded as it talked of standing down or sacking 6,000 workers.
Two shopping mall property groups fell after Premier Investments shutdown brands including Smiggle, Peter Alexander, Portmans and Just Jeans and said it would not pay rent to landlords.
Vicinity Centres dropped 4.9 per cent to $1.06 and Westfield;s owner Unibail-Rodamco-Westfield fell 8.9 per cent to $5.11, while overall the property sector was up 3.9 per cent.
The big supermarkets were mixed, with Coles down 0.6 per cent at $16.55 and Woolworths up 0.9 per cent to $35.93.
The big banks were mostly up, with NAB climbing 2.2 per cent to $16.14, ANZ up 0.8 per cent to $16.70 and Westpac up 1.1 per cent to $16.02.
Commonwealth was the outlier, falling 1.0 per cent to $61.80.
In the heavyweight mining sector, BHP dropped 2.0 per cent to $30.67 but Rio Tinto gained 5.1 per cent to $88.13 and Fortescue Metals rose 2.9 per cent to $10.52.
Goldminers were mostly lower as the price of the precious metal fell 1.0 per cent to just under $US1,600, with Northern Star falling 15 per cent after announcing that it would defer paying its interim dividend and was withdrawing its guidance because of the impact of measures to control the coronavirus.
In non-coronavirus news, Seven West Media gained 12 per cent to 7.7 cents after the ACCC said it would not stand in the way of Bauer Media’s acquisition of Seven’s Pacific Magazines.
Brickworks dropped 1.3 per cent to $15.05 after announcing its first-half statutory net profit dived nearly 50 per cent on the back of a slowdown in building activity in Australia.
The Aussie dollar was buying 59.14 US cents, down from 60.33 US cents at market close on Wednesday.
ON THE ASX:
* The benchmark S&P/ASX200 index finished on Thursday up 115.2 points, or 2.3 per cent, at 5,113.3 points
* The All Ordinaries closed up 129 points, or 2.58 per cent, at 5,135.2 points
* At 1714 AEDT the SPI200 futures index was down 25 points, or 0.5 per cent, at 5,093 points
One Australian dollar buys:
* 59.14 US cents, from 60.33 US cents on Wednesday
* 65.40 Japanese yen, from 65.65 yen
* 54.21 euro cents, from 55.02 cents
* 49.92 British pence, from 41.05 pence
* 101.69 NZ cents, from 102.48 cents.