Carnage Continues | Crown Casino

18 March 2020

Global markets fell sharply overnight as the US market (S&P500) plunged -12%, even following the Fed slashing interest rates down to 0.25%, and President Donald Trump spoke that the economy could fall into a recession. The S&P index is now down 30% from it's all-time high. European markets were also down -4.9% overnight, while Asian markets reacted negatively to weaker than expected data from China for the month of January and February, as retail sales tumbled -20.5% and industrial production was down -13.5% year on year.

Many major US cities are imposing some sort of lockdown, with New York closing public schools and bars and restaurants are to close or focus on home deliveries to encourage social-distancing. In the UK it is recommended that people do not visit restaurants, bars or public places, and in France there has been a total lockdown.

The number of covid-19 cases continue to grow, now at 168,000 with 6,600 confirmed deaths, so the heightened containment efforts are crucial to see some slowdown. As cases continue to climb rapidly there will still be more market volatility over the near-term, with real economic implications from the external shock and lack of activity set to hit economies around the world.


Stock in Focus: Crown Resorts Limited (CWN:ASX)

Crown Resorts fell -11% yesterday, after announcing social distancing measures that will be implemented in its Melbourne facility, to mitigate the spread of the covid-19 virus.

The measures include a deactivation of every second gaming machine and electronic table game, along with distancing at seated table games between players. A restriction of a maximum of 5 players at each stand-up table has been put in place, as well as restrictions on the number of patrons to only 450 persons within its food and drink areas as well as its banqueting, casino facilities and conference facilities.

This creates more challenging times for the hotel and casino operator who advised the initial covid-19 outbreak had resulted in softened trading conditions, we believe things are likely to get worse  until the outbreak is contained. 

There are also implications for SkyCity. 

We currently have a HOLD rating on CWN
Members should look out for a full update on CWN to be released in our weekly report.



Australia & New Zealand Market Movers

The Australian market crashed on Monday (ASX 200 index -9.7%) extending its frantic sell-off into fourth week on Monday as unscheduled, aggressive rate cuts from the Federal Reserve and Reserve Bank of New Zealand added more fuel to the market volatility seen in the last few weeks, as well as travel bans and restrictions worldwide  to curb covid-19 virus. 

All sectors were hit heavily, as fears of global economic slowdown heightened, with losses exaggerated against Friday's gains for Energy and Banking especially. Casino focused stocks were also hit heavily after Crown's announcement to limit contact between punters, dragging Star Entertainment and Aristocrat lower. Ardent Leisure also continued its free-fall, given its exposure to theme parks and entertainment facilities.   

The NZ market slumped yesterday (NZX50 -3.6%) as the market reacted to Prime Minster Jacinda Arderns travel restrictions. There was no love for the Tourism sector, with Tourism Holdings leading the market lower down -31%, while Auckland International Airport fell 21% after suspending both its earnings and capital expenditure guidance for the year in light of the travel ban.  
Air NZ was put into a trading halt  to assess the financial and operational effects of the travel ban as it will slash its international long-haul service by 85% over the coming months with severe job cuts and redundancies now on the line. Aged-care providers, also experienced significant losses again yesterday as elderly residents are the most vulnerable to the coronavirus outbreak, with the major providers meeting regularly to devise a plan to protect their residents. Fisher & Paykel shares helped offset market wide losses up +9.1% yesterday as the kiwi weakened,  while Spark edged higher up +1.2%.


3 Things Markets Will be Watching this Week

  1. ​​​​​​​Coronavirus related news-flow remains key in terms of driving investor sentiment.
  2. ​Moves from central banks globally in response to coronavirus, 
  3. Data from the US including building permits, housing starts and existing home sales. Closer to home, Australia’s latest employment data is due to be released on Thursday along with the latest net migration data in NZ.

Have a Great Day,


The number of covid-19 cases continue to grow, now at 168,000 with 6,600 confirmed deaths, so the heightened containment efforts are crucial to see some slowdown. As cases continue to climb rapidly there will still be more market volatility over the near-

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