Australia share market rises despite surging COVID-19 cases

Published On: July 6, 2020Categories: Stocks & Shares1.9 min read

The Australian dollar lifted slightly (+0.3pc) to 69.57 US cents on Monday

The Australian share market has risen back into positive territory despite surging COVID-19 infections in Victoria, and across the world, hitting investor sentiment.

By 12:55pm AEST, the benchmark ASX 200 had lifted by 0.1 per cent to 6,066 points.

Investors are trading cautiously after Victoria reported 127 new cases overnight, on top of 182 infections over the weekend.

Victoria Premier Daniel Andrews announced his state’s border with New South Wales will close from Wednesday.

Also, the World Health Organization (WHO) reported a record spike in cases on Saturday, with the total rising by 212,326 in just 24 hours.

The Australian dollar lifted slightly (+0.3pc) to 69.57 US cents on Monday.

The Aussie dollar has been trading in the 0.68-0.70 [range], following the stall in global market sentiment as indications of global recovery are being offset by second Covid-19 waves, said Robert Carnell, ING’s head of research in the Asia-Pacific.

Currency traders will be closely watching the Reserve Bank, which meets on Tuesday and is widely expected to keep interest rates on hold.

The main concern for the central bank and the Australian government may be the strength of the Australian dollar, Mr Carnell said. And it is possible that the upcoming rate meeting looks to talk up some of the possible downside risks to the economy and policy choices to keep the Australian dollar from moving too much higher.

Though global market sentiment and appetite for the Australian dollar and Australia’s commodity exports could shortly turn for the worse if COVID-19 flare-ups in the US and elsewhere do not begin to turn back down again, he said.

Consumer discretionary was the best performing ASX sector, driven by Super Retail Group (+3.7pc), JB Hi-Fi (+1.5pc) and Premier Investments (+1.9pc).

Online travel booking site Webjet (+2.7pc), lithium producer Orocobre (+4pc) and advertising firm Ooh!Media (+6.6pc) were also among the strongest performers.

On the flip side, cement manufacturer Adbri (-5.3pc), BlueScope Steel (-2.4pc) and Bega Cheese (-3.4pc) suffered some of the heaviest losses.

The market was initially weighed down by the major banks — Commonwealth Bank, Westpac, ANZ and NAB — trading in the red. They have since risen between 0.3 and 0.5 per cent.

However, the mining giants are the biggest drag on the market.

BHP, Rio Tinto and Fortescue Metals have dropped by 0.8, 0.5 and 0.4 per cent respectively.

The ASX followed a weak lead from European markets, with Britain’s FTSE (-1.3pc) and Germany’s DAX (-0.6pc) closing lower on Friday.

Wall Street was closed for the Independence Day public holiday.

About the Author: Jonathan Adams

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