ASX200 sheds $500 billion in first quarter of 2020

Australia’s benchmark index has ended the first quarter of the year nearly $500 billion poorer, down 24 per cent, after falling from a market capitalisation of $2 trillion down to $1.56 trillion.

“The first quarter of 2020 has been one of the worst quarters for global stock markets in the 150 history of the S&P 500,” said State Street’s senior strategist, Marija Veitmane.

“While it is too early to say if the relentless efforts from central banks and governments to support the global economy would be enough to cushion economic recession and support stock markets, underperformance of stock markets rarely lasts for a long-time.”

The benchmark ASX 200 index finished Tuesday’s session at 5076.8 points, a decline of 104.6 points, or 2 per cent. Since the start of the year, the index has slumped from a session high of 7197 on 20 February to a low of 4402.50 on 23 March.

Markets have tumbled as governments impose travel restrictions and lockdowns in a bid to slow to spread of COVID-19, but which are also likely to lead to a recession. Future market performance depends on the rate of coronavirus infections and deaths around the world.

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Volatility continues to dominate stock markets, with large swings and trading ranges becoming normalised on the ASX. Blue chip stocks like Cochlear dropped by $13 in just a few minutes on Monday afternoon, while the rest of the market was on track to have the best session in history, up 7 per cent.

“Outside of automated trading and high frequency trading, I don’t know who else could be doing these types of trades,” says chief investment officer at Australian Eagle Asset Management, Sean Sequeira.

“The volatility is just quite difficult to fathom for me. It is something that we have to look through, peer beyond the near term to determine what stocks we want to be in. I am not convinced yet that we won’t have more weakness.”

Tuesday’s biggest swings included a gain of 25.5 per cent in Credit Corp, 23.3 per cent in EML Payments, and 19.3 per cent in G8 Education.

Telstra shares fell by 5.5 per cent on Tuesday to close at $3.07.
Telstra shares fell by 5.5 per cent on Tuesday to close at $3.07. Credit:Daniel Pockett

The biggest declines included a fall of 12.4 per cent in Resolute Mining and Aurizon Holdings, and a 12 per cent fall in Unibail Rodamco Westfield.

Real estate stocks outperformed with gains of 2.7 per cent and information technology gained 1 per cent, while consumer staples and communications underperformed with declines of 5.9 per cent and 4.3 per cent respectively.

Telstra fell by 18¢, or 5.5 per cent, to close at $3.07. CSL fell 5.1 per cent to close at $296.68, and Woolworths declined by 8 per cent to $35.10.

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Source: Thanks smh.com