Australian share market darling Afterpay Ltd (ASX: APT) shares were leading the ASX down on Friday, following more sell-offs on global markets overnight.
At the time of writing, Afterpay shares were down 9% and weighing on the S&P/ASX 200 (ASX: XJO), which was down 3%, according to Google Finance. Fellow consumer-focused company Harvey Norman Holdings Ltd (ASX: HVN) was following closely behind Afterpay, its shares were down 8%.
Australian share market down on Coronavirus
As concerns over the Coronavirus continue to make headlines, companies on the Australian share market also happen to be handing down their latest batch of financial results.
So far, it seems, if a company misses analysts’ targets (or analysts get it wrong) and the company pauses for caution over a Coronavirus impact — shares get sold down.
Obviously, this is perpetuated by the fearmongering of most financial news websites in Australia. That said, there is no shortage of companies watching the Coronavirus headlines.
Logistics software business WiseTech Global Ltd (ASX: WTC), vitamin producer Blackmores Ltd (ASX: BKL) and even the plumbing products company Reliance Worldwide Corporation (ASX: RWC) have made note of the potential impacts from the virus.
As we wrote earlier this week in “How Often Does The Australian Sharemarket Crash?” the total global death toll from coronavirus was less than the average number of car fatalities each day. Hopefully that helps with some context.
Of course, the financial impact and consequences of people staying at home, instead of shopping for consumer goods or going out for leisure, seems to be having an impact on many companies’ bottom lines. Such considerations are important for stock market analysts to consider, who base their valuations on forecasts of cash flow and profits.
“Our view on the COVID-19 situation is a balanced one. On the one hand, we expect the virus to blow past containment efforts, creating a genuine public health crisis and introducing short-term risks investors would do well to observe,” Lakehouse Capital’s Chief Investment Officer Joe Magyer wrote to clients this week. “On the other hand, we remain long-term optimists.”
Magyer pointed to potential stimulus efforts that investors could expect from states around the world, should the situation worsen.
“…none of this is operating in isolation: interest rates have plunged as investors probably rightly anticipate a loosening up of monetary and fiscal policy to help stave off economic slowdowns,” Magyer said.
“Indeed, if history is any guide, we expect Beijing to pull forward an immense amount of spending to help re-accelerate growth. Also, while we have low expectations of a vaccine in the coming year, it is a relief to know that so many talented, dedicated scientists and medical professionals are working towards better treatments and hopefully a vaccine.”
Harvey Norman Reports
In the half-year to 31 December 2019, Harvey Norman reported a 5% increase in revenue, compared to the prior corresponding period, along with a profit of $217 million, down 4%. Harvey Norman declared a dividend of 12 cents per share fully franked, in-line with last year.
While the company said it had a positive start to calendar year 2020, it noted the impacts of bushfires, floods and then the Coronavirus. “Consumer and business confidence will take another toll until this threat is understood and mitigated,” the company’s ASX release noted.
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