Australia: US stimulus hopes help shares bounce back from 8% fall
[SYDNEY] Australian shares rebounded sharply on Friday to end firmly in positive territory as hopes of more stimulus from the United States offered a measure of support to world markets battered by coronavirus fears.
After plunging 8 per cent earlier in the session, a sudden cross-sector recovery led by healthcare, financial and energy stocks powered the S&P/ASX 200 index 4.4 per cent higher to 5,539 points, their biggest daily gain in more than 11 years.
Still, the benchmark suffered its worst week since the global financial crisis in 2008 as investors dumped riskier assets after the aggressive global spread of the flu-like virus threatened growth.
"Given that this week has been such a fantastic week for short sellers, you'd have to think there was a lot of short covering happening ahead of the weekend and the U.S. session," said Julia Lee, chief investment officer at Sydney-based Burman Invest, adding that expectations of U.S. stimulus were also aiding sentiment.
The White House and US lawmakers neared an agreement on a coronavirus economic aid package, House Speaker Nancy Pelosi said on Thursday, adding she hoped to announce a deal on Friday.
The Reserve Bank of Australia injected an unusually large amount of cash into the financial system on Friday as panic selling across global markets threatened to drain liquidity.
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Australia's "Big four" banks recovered from sharp losses earlier in the session, with top lender Commonwealth Bank of Australia surging 5.2 per cent, while the other three rose between 1.5 per cent and 3 per cen.
In New Zealand, the benchmark S&P/NZX 50 index closed 4.9 per cent lower, missing the late surge that supported Australia and many other markets in Asia.
REUTERS
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