The Motley Fool

The ASX stocks hit by Victoria’s stage 4 forced shutdowns

A wide range of ASX stocks are about to be hit by forced shutdowns in Victoria as the state grapples to control the second wave of COVID-19 cases.

The state’s premier Danial Andrews is ordering most retailers to shutter along with construction sites, car dealerships and manufacturing plants, reported the Australian Financial Review.

ASX stocks slumping on the news

The news sent the JB Hi-Fi Limited (ASX: JBH) share price and the Harvey Norman Holdings Limited (ASX: HVN) share price tumbling to intra-day lows. Both stocks tumbled over 2% each at the time of writing.

Listed auto dealerships also hit the lows of the Monday trading session. The AP Eagers Ltd (ASX: APE) share price crashed 5.6% to $7.66 while the Autosports Group Ltd (ASX: ASG) share price lost 2.3% to $1.27.

Another to lose steam in late trade is the Lendlease Group (ASX: LLC) share price. It lost 2.4% to $11.08, probably on worries that some of its construction sites will need to be closed.

New restrictions on construction

There will only be three types of construction that will be allowed to continue in metropolitan Melbourne but with stricter restrictions coming into force by midnight Friday.

Government infrastructure projects can continue. While the number of people working on these projects have been halved, the state government will be looking to reduce this even further.

Large non-residential construction projects with buildings above three storeys will be allowed to remain open.

However, operators will need to cut the number of workers to “a practical minimum” but with no more than 25% of their workforce.

For residential sites, operators cannot have more than five people working onsite at any one time.

Smaller companies to get more help

While the government is offering some financial support for businesses, its mainly aimed at smaller business and won’t make much difference to larger listed companies.

Premier Andrews isn’t ruling out providing more support packages targeting specific industries, but I don’t think these will make much difference to larger listed companies.

ASX winners benefiting from State of Disaster

On the flipside, this latest development sent shares in a handful of ASX stocks higher. The Ltd (ASX: KGN) surged nearly 10% to a record high of $18.31 ahead of the close.

The Coles Group Ltd (ASX: COL) share price and Woolworths Group Ltd (ASX: WOW) share price also outperformed the S&P/ASX 200 Index (Index:^AXJO). Supermarkets are allowed to operate during stage four restrictions and so are petrol stations.

This is why the Viva Energy Group Ltd (ASX: VEA) share price and Ampol Ltd (ASX: ALD) share price surged by over 5% each.

These 3 stocks could be the next big movers in 2020

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 6/8/2020

Brendon Lau owns shares of Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended ltd. 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.

Related Articles...