The S&P/ASX 200 (ASX: XJO), Australia’s share market index, ended Monday’s trading session down a jaw-dropping 9.7%. Of course, this follows falls of 20% so far this year.
As my aunt would say if she looked down at her share brokerage account today — hooley dooley!
Today, the Australian share market recorded its single biggest fall on record, after a series of important societal and macroeconomic updates were made.
The headlines every investor needs to know today
Here’s all the negative stuff and what happened in the financial world today…
- The Australian share market fell 9.7%
- Australia’s central bank (RBA) said it is stepping into the bond/credit market (read “quantitative easing” or QE) to ensure banks, companies and Australians have access to cash and credit like normal
- ASIC, the financial watchdog, is restricting share trading activity by up to 25% from certain investors and brokerage firms, following an almighty spike in trades on Friday
- Victoria and New South Wales have announced a state of emergency, providing special powers for authorities to, for example, close gatherings of 500 people or more
- Woolworths has said it will temporarily shut supermarkets (e.g. for just 1-2 hours) later this week. This will allow vulnerable people and the elderly to shop in relative calm — and to help its staff restock shelves.
According to Commsec, the Australian share market’s 5 worst performers on Monday were as follows:
- Auckland International Airport Ltd (ASX: AIA) – down 24%
- Aristocrat Leisure Ltd (ASX: ALL) – down 20%
- Oil Search Limited (ASX: OSH) – down 20%
- Cochlear Limited (ASX: COH) – down 19%
- Star Entertainment Group Ltd (ASX: SGR) – down 23%
With the exception of Cochlear, which rose more than 10% on Friday, there’s a familiar trend with these companies. It’s obvious to me that some businesses are particularly vulnerable to the Coronavirus slow-down and were almost always likely to have a bad day.
For example, travel-related companies such as Sydney Airport Holdings (ASX: SYD) and Auckland Airport (AIA) are contending with the Australian and Kiwi Governments’ front-line efforts to contain the virus by canceling or restricting air travel.
Meanwhile, Aristocrat and Star operate gaming spaces that depend on lots of people being in one place, at virtually the same time.
Star Entertainment this morning said it will introduce social distancing measures and restrict the number of patrons at conferences. Aristocrat makes gaming machines used by casinos and the like.
Finally, Oil Search and many other oil and gas companies, like Woodside Petroleum Ltd (ASX: WPL) and Santos Ltd (ASX: STO), are dealing with slumping oil prices in the wake of oversupply concerns.
Some positive news
If you’re looking for positive news, there are a few things all optimists can focus on right now, including:
- In February, investors invested heavily in ETFs, according to BetaShares
- Interest rates are now extremely low (sure, it’s a minimal impact right now…)
- We want regulators (RBA, ASIC, APRA) to take action — it’s important they do
- The entire country is now aware of the COVID-19 problem and wants to fix it (perhaps with the exception of one old, crusty radio shock jock)
- Families, religious groups, businesses, sports teams and organisations are taking it upon themselves to cancel all gatherings, going to school, training and other events — they are doing their part, even if the Chief Medical Officer has yet to recommend such action
- It’s possible we’re at or near share market peak volatility and fear (think about it… see VIX commentary)
- Share prices have been heavily discounted, some justifiably, some not. They can always fall 100%, but as always, share prices can go upward a lot more than 100% over the long run.
- Our country is one of the best countries on earth for its level of healthcare, financial strength and integrity, politics, natural beauty and living standards
- We still have the best coffee in the world*
*Okay, that last one was tongue in cheek… everyone knows it’s only Melbourne which has decent coffee…
How 3 analysts are preparing for the share market sell-off…
In the video above, part of Rask’s YouTube channel, I spoke with two investment analysts, Claude Walker and Andrew Page, about how they are seeing the current market, including what companies to avoid and why, and where the best opportunities might be found.