Global markets rallied strongly overnight with the US market (S&P500) surging +9.4%, on optimism congress is closer to enacting a $2 trillion stimulus bill to prop up the economy as we enter a recession. All sectors traded higher with energy and financials performing the best, given they were most heavily sold-down and faced the greatest risk in an economic slowdown. Likewise the European market jumped +8%, while all major Asian markets rallied strongly as well.
It appears governments around the world are lifting their commitment to prevent an economic disaster, supporting businesses to ensure they can weather the storm. While markets may have rallied strongly, we are still in a period of heightened volatility and uncertainty given the major issue is that the covid-19 virus is still continuing to spread at an alarming rate globally, as the rate of growth continues to climb.
Stock in Focus: Ryman Healthcare (RYM:NZX)
Retirement village operator Ryman jumped +24% yesterday, and is up another +21% this morning after being heavily sold-off. Ryman withdrew profit guidance and have halted construction over the 4-week lockdown period, but will continue to operate its retirement villages as an essential services.
Sales activity will be heavily restricted but Ryman will continue to admit new residents to their care centres and retirement villages during this period who need their services.
The risk clear to the sector is an outbreak of coronavirus in the villages, which would be catastrophic and why Ryman has locked down its villages in order to protect residents.
We currently have a HOLD rated.
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Australia & New Zealand Market Movers
The Australian market rebounded aon Tuesday (ASX 200 index +4.2%) as governments and central banks around the world continue to lift their support to prevent a major economic shock, giving investors some confidence to buy into stocks which are trading cheaply.
The energy sector performed the best, while a number tech names also recorded strong gains Afterpay up +26%, Wisetech up +13.9% and Xero up +7.4%. The heavily beaten down banking sector also saw some relief, while diversified mining giant BHP jumped 5.2%, leading its mining peers..
The NZ market rebounded yesterday (NZX50 +7.2%), recovering almost all of Monday's slump, with investors jumping in and weighing risk/reward opportunities in a discounted market. New Zealand banks have been offered government guarantees of up to $6.25 billion in new lending to "solvent businesses" in an attempt to keep more businesses afloat.
Tourism holdings led the market higher jumping +32.7%, as it reiterated on Monday they still trade well below their net asset value with more the $100m lending facility to tap into. The retirement sector (albeit Metlifecare) rebounded as they will continue to operate as essential services and post the heavy sell-off attracted some investors.
The Warehouse Group was placed in a trading halt, given its shares surged when it announced it would remain open during the 4-week lock down claiming it was an essential service. However, this was shot down by the government saying it has not been approved as an essential service.
3 Things Markets Will be Watching this Week
- Coronavirus related news-flow remains key in terms of driving investor sentiment.
- Moves from central banks globally in response to coronavirus,
- Corporate earnings guidance changes from Australasian businesses.
Have a Great Day,