Sydney stocks closed with gains after central banks around the world including the US Federal Reserve, European Central Bank and the Bank of England announced huge new injections of funds into financial markets to support credit markets and the economy. They've been backed by governments, which have committed trillions of dollars worth of new spending and credit guarantees to help support their economies.
The New York Federal Reserve continued its effort to create liquidity in the strained financial markets by announcing it would purchase another $10 billion of mortgage-backed securities, part of a larger package of $200 billion in mortgage bonds the Fed promised on Sunday to buy as it relaunched quantitative easing. The US central bank has also taken steps to ease an acute shortage of dollars that was destabilizing markets. Also on Thursday, the European Central Bank launched a program to inject money into credit markets by purchasing up to 750 billion euros ($820 billion) in bonds. The Bank of England cut its key interest rate to a record low of 0.1%. Australia's central bank also cut its benchmark lending rate to 0.25%. Central banks in Taiwan, Indonesia and the Philippines also cut their benchmark rates. Hopes are rising for progress in finding virus treatments and that a boatload of stimulus by both central banks and governments will put the global economy in position for a U-shaped recovery,
Investors also appeared to be encouraged by reports that China is set to ramp up stimulus spending after the province where the virus emerged in December showed no new infections on Wednesday. As central banks worldwide slash interest rates, though, the People's Bank of China on Friday kept its new benchmark lending rate unchanged on Friday. The one-year Loan Prime Rate remained at 4.05% for March, while the five year rate held steady at 4.75%. That China's central bank left those rates unchanged is a sign that the country's fight against the novel coronavirus pandemic is at a different stage than the rest of the world.
Some of the big improvers today included construction firm CIMIC (CIM) which soared 51%, buy-now pay-later provider Afterpay (APT) was more than 40% higher at one stage but closed with a gain of 25%. Supermarkets, Woolworths (WOW) and Coles (COL) both fell sharply, down 6% and 2.7%. CSL Ltd (CSL) was down 4.5% and Telstra (TLS) tumbled 6.1%. The telco announced it was expecting a 'material' impact on its FY 20 earnings but will put on hold any further job cuts for the next six months.
There has been plenty of attention around the banks following the emergency cut to the official cash rate by the RBA with three of the big four improving significantly. Westpac (WBC) and National Bank (NAB) saw the biggest improvements with gains of 8.5% and 7.5% respectively. ANZ Bank (ANZ) saw a more modest increase of 6.8% but Commonwealth Bank (CBA) eased 1.7%.
Retailer, Premier Investments (PMV) lifted 15% on its first half profit results. Sales over the period were at record levels with a jump of 7.6% to $732 million while earnings also lifted by 10%. PMV also announced a record interim dividend of $0.34/share.
CURRENCY: The Australian dollar was at $0.5918 after seeing an earlier low of $0.5662.
Crude oil prices rose in the afternoon of Asian trading hours, with international benchmark Brent crude futures adding 4% to $29.61 per barrel. U.S. crude futures also jumped 6.3% to $26.81 per barrel.
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