UPDATED 4.25PM (ADST)
Australian shares have had a roller-coaster Friday, starting the day with a plunge deep into the red before staging what has been called a “remarkable turnaround”.
In a volatile session, the benchmark ASX 200 index fell by as much as 8 per cent on Friday.
But later in the day, and following Prime Minister Scott Morrison’s post-COAG media conference where he announced a looming ban on gatherings of more than 500 people, it managed a Lazarus-like turnaround, to be up about 4.4 per cent.
Burman Invest chief investment officer Julia Lee said it had been “an amazing ride”.
“I think I have a case of whiplash,” she said.
“To give you a sense of the turnaround, this morning when the market opened, not one single stock in the ASX 200 was trading higher. Everything was red, everything recording losses. Coming into the afternoon … it seems like a totally different market.”
Ms Lee said the united response to the coronavirus health crisis had given the market a sense of calm and was” very different to what is happening offshore and around the region”.
“We are still seeing the Japanese market down more than 8 per cent,” she told the ABC on Friday afternoon.
The Australian sharemarket has still had a torrid few days, losing more than $500 billion – or 25 per cent of its value – since plummeting from its February 20 record high.
Worldwide, stocks have fallen some $US14 trillion in a month.
The Australian dollar plunged by 4 per cent to a 17-year low early on Friday.
It fell as low as 62.16 US cents, before lifting back to 62.7 cents – still its lowest value since April 2013.
The US market sank after Mr Trump imposed a ban on European travellers entering the US, as global authorities struggle to deal with the coronavirus pandemic.
The New York Federal Reserve surprised by pumping huge amounts of cash into the banking system.
After adding $US500 billion on Thursday, it will inject another $US1 trillion on Friday to try to stop borrowing costs from rising. Australia’s central bank has also injected an unusually large $US5.5 billion into the financial system.
Friday’s plunge came as European markets had their worst session ever, and Wall Street’s Dow Jones index fell 2353 points (or 10 per cent) to 21,201 overnight.
That made it the Dow’s worst single day drop since the Black Monday crash in October 1987, when it shed more than 22 per cent.
“There is a sense of fear and panic,” said James Tao, an analyst at stockbroker Commsec in Sydney, where phones at the high-value client desk rang non-stop.
“It’s one of those situations where there is so much uncertainty that no one quite knows how to respond … if it’s fight or flight, many people are choosing flight at the moment.”
Every local sector endured heavy losses, with financials (-6.6 per cent) and industrials (-8.1 per cent) the worst performers.
Gold, usually a safe harbour in times of panic, has fallen 4 per cent to $US1563.42 an ounce in two days. Bond yields, which rise when prices fall, lifted on long-dated US Treasuries overnight and held there on Friday. Sovereign 10-year yields for Australia, Japan, New Zealand, Thailand, Korea and Singapore rose.
“Wherever anyone has any risk, people just want to bring risk back to flat at the moment, that’s what happening,” said Stuart Oakley, Nomura’s global head of flow FX in Singapore.
“This is what happens when you get what’s known as a value-at-risk shock, where people have drawn down so much P&L that they just need to draw down all risk.”