It’s been yet another brutal week for the S&P/ASX 200 Index (ASX: XJO).
Fears surrounding the outbreak of the coronavirus as well as impending lockdowns of most of the country this week left the ASX nursing its worst week since the Global Financial Crisis of over a decade ago.
It was only last week we were saying the same thing for the ASX 200. But this week has once again broken the record that no-one wants to see broken.
Last week, we saw further travel restrictions imposed on non-Australian residents entering the country. For all intents and purposes, our borders are set to remain closed for the foreseeable future. From today, we can expect to see ‘non-essential’ services starting to shut down following the announcement from Prime Minister Scott Morrison late yesterday.
We’ve also seen the Prime Minister announce two massive fiscal stimulus packages, with a third on the way, to counter the devastating economic effects that this virus is set to wreak on the economy. These include massive taxation concessions for businesses as well as both new and increased welfare payments for existing recipients and those out of work as a result of the lockdowns.
There is also a suite of measures that will aim to assist the free flow of credit for businesses and individuals from the country’s largest banks, Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB).
This came on top of the Reserve Bank of Australia (RBA) holding an emergency mid-month meeting last week in which the cash rate was dropped to another record low of just 0.25% – which is practically zero.
The RBA has now delivered a double-cut just this month and has also announced the commencement of an Australian Quantitative Easing program – which will aim to establish a ‘price target’ on government bonds. This measure is designed to add stability and certainty to the foundations of the financial system.
The new record low interest rates will mean most homeowners (and other borrowers) can expect a further reduction in mortgage interest payments going forward. However, it also means that most Australians can expect even lower interest rates on their savings accounts and term deposits.
How did the markets end the week?
On Monday, the ASX 200 opened at 5,539.3 points. By Friday, this had fallen to a level of 4,816.6 points – a weekly loss of 13.1%.
That was despite a small 0.70% recovery on Friday. Monday ended up being the worst day of the week (as Garfield always foretold), with a 7.55% one-day decline.
We are now firmly under the 5,000-point threshold that was flirted with repeatedly last week – and at lows not seen since February 2016.
Meanwhile, the ALL ORDINARIES (ASX: XAO) lost 12.45% to finish the week at 4,894.3 points.
Another notable story was the continuing freefall of the Aussie dollar, which crashed to under 56 US cents for the first time since 2002 on Thursday, hitting a low of 55.11 US cents. It has now recovered somewhat and is asking around 58 US cents at the time of writing.
We also lost a sliver of national pride on the same day when we saw the New Zealand dollar become more valuable than the Aussie dollar for the first time since the float (albeit briefly).
For some ASX shares to keep an eye on in this volatile market, make sure you check out this report!
Which ASX shares were the biggest winners and losers?
Friday’s winners and losers list shows just how ‘wild west’ the ASX became last week.
Firstly, the losers:
Friday’s wooden spoon goes to Sonic Healthcare Ltd (ASX: SHL), who suffered a 12.55% loss after withdrawing its guidance over uncertainly surrounding the coronavirus pandemic, despite also confirming its laboratories around the world were assisting governments with virus testing.
Also feeling the pain was Southern Cross Media Group Ltd (ASX: SXL). Media companies like Southern Cross Media rely on advertising revenue for their earnings, which is almost certainly on track for a big squeeze considering businesses around the country are shutting up shop. Fellow media player Nine Entertainment Co Holding Ltd (ASX: NEC) has also seen heavy losses in this crash.
And (for some much-needed good news), here are last Friday’s winners:
Engineering contractor Cimic Group Ltd (ASX: CIM) tops the list with an extraordinary 51.15% gain on Friday. This appears to be in response to some heavy buying after Cimic shares were wiped out with a 31.3% on Thursday – perplexingly finishing the week around where it started. Moves like this show the pure level of volatility that’s at play in the markets right now.
Fund manager Pendal Group Ltd (ASX: PDL) and buy now-pay later pioneer Afterpay Ltd (ASX: APT) also deserve a mention for experiencing similar moves this week. Afterpay shares plunged under $10 on Thursday before rebounding to over $16 on Friday. It’s enough to give anyone whiplash!
What is this week looking like for the ASX?
After the RBA effectively exhausted its monetary policy arsenal last week, all eyes are on the Federal Government this week for more details of fiscal stimulus, on which the economy’s fortunes are now sitting on.
Expect some more announcements coming out of the government, both on budgetary measures and new restrictions. These could be the things that move markets one way or another this week.
But unfortunately, it looks to be another week of news dominated by the coronavirus and its ballooning effects on everyday life. And that will most likely contribute to ongoing volatility with the stock market.
Here is a table of how the ASX blue-chips are looking as we start the new week:
And finally, here is the lay of the land for some leading market indicators:
- S&P/ASX 200 at 4,816.60 points
- ALL ORDINARIES at 6,287.5 points
- Dow Jones Industrial Average at 19,173.98 points
- Gold is asking US$1,497.64 per troy ounce
- Brent crude oil is trading at US$26.98 a barrel
- Australian Dollar buying 57.98 US cents
Another tough week has passed, and it’s likely another tough week looms ahead, not just for the ASX, but for the entire country. Stay safe out there Fools and continue investing with courage! We’re all in this together and we will get through it. Remember, it’s always darkest before the dawn!
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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited, Newcrest Mining Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and National Australia Bank Limited. The Motley Fool Australia has recommended Nine Entertainment Co. Holdings Limited and Sonic Healthcare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.