Historic rate cut propels ASX: Aus shares close 1.9% higher

Market Reports

by Michael Luu

The ASX maintained strong momentum throughout the day and was propelled by news of the RBA’s cash rate cut to a historic low. The lower cash rate has also prompted a drop in the exchange rate. The most significant contributors to the upward trend were major players Commonwealth Bank (ASX:CBA), CSL (ASX:CSL) and BHP (ASX:BHP).

At the closing bell, the ASX 200 closed 1.9 per cent higher or 115 points up at 6066.

Local economic news

The Reserve Bank has cut the cash rate to 0.1 per cent in a bid to boost employment and bail the Australian economy out of the pandemic.

The Reserve Bank announced that it will purchase $100 billion worth of government bonds with maturities of 5-10 years in the upcoming half year.

Futures

US futures are all higher the Dow futures are suggesting a rise of 180 points. S&P 500 futures are eyeing a lift of 14 points. The Nasdaq futures are eyeing a gain of 14 points.

And the SPI futures are eyeing a rise of 124 points tomorrow morning.

Company news

Banking heavyweight Commonwealth (ASX:RBA) has become the first to respond to Financial Counselling Australia’s call to combat forced home sales prompted by the COVID-19 pandemic.

The bank will cease home foreclosures until September 2021 for mortgage holders who were up-to-date with payments before the pandemic struck. Customers fulfilling mortgage repayment responsibility for 12 months before applying for home loan deferrals will be eligible to keep their homes till the aforementioned date.

Shares in the Commonwealth Bank of Australia (ASX:CBA) closed 1.4 per cent higher at $69.82.

Other company news

AngloGold Ashanti (ASX:AGG) delivered a near fourfold increase in free cash flow in the third quarter of 2020, driving its Adjusted net debt to its lowest level in almost a decade.

Propel Funeral Partners (ASX:PFP) has completed the acquisition of the companies that own and operate the businesses trading as Dils Funeral Services, Schnapper Rock Cremations and Rowley Funeral Services, and certain freehold properties.

Senex Energy (ASX:SXY) has entered into a binding agreement with Beach Energy Ltd (ASX:BPT) to sell its South Australian Cooper Basin assets for $87.5 million cash consideration.

Best and worst performers

The best-performing sector was energy, gaining 5.3 per cent while the sector with the fewest gains was consumer staples, adding 0.5 per cent.

The best performing stock in the S&P/ASX 200 was Webjet (ASX:WEB) rising 8.7 per cent to $3.77, followed by shares in Pendal Group(ASX:PDL) and Credit Corp Group (ASX:CCP) The worst performing stock in the S&P/ASX 200 was Sandfire Resources (ASX:SFR) dropping almost 7 per cent to $4.13 , followed by shares in Treasury Wine Estates (ASX:TWE) and Deterra (ASX:DRR).

Asian markets

Mostly higher: Japan’s Nikkei is closed, Hong Kong’s Hang Seng is 1.9 per cent higher and the Shanghai Composite has gained 1.1 per cent.

Commodities

Gold is trading at US$1,893 an ounce.
Iron ore has gained 0.5 per cent to $118.06
Iron ore futures are suggesting a fall of 1 per cent.
Light crude has shed 3 cents to $36.78
One Australian dollar is buying 70.41 US cents.