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Australian shares have begun the week sharply higher, with appetite for risk-taking boosted by the nation's slowing COVID-19 infection rates.
Investors are shrugging off the rise in coronavirus cases overseas, US President Donald Trump's warning to Americans that there will be "a lot of death" in the coming days and the delay of a crucial OPEC meeting which caused oil prices to plummet.
By 3:45pm AEST, the ASX 200 had surged by 4.6 per cent to 5,301 points.
It is outperforming its Asia-Pacific peers by a long shot, including Japan (+2.4pc), South Korea (+2.9pc), Hong Kong (+1.1pc) and Shanghai (-0.6pc).
Even with today's rebound, the Australian market remains in bear-market territory, having lost 27 per cent since its record high in late February.
Local optimism is also getting a boost from the US futures market — which is predicting a 2.5 to 3 per cent jump on Wall Street's main indices later tonight.
Meanwhile, the local currency had lifted slightly back to 60.1 US cents.
"The Australian dollar will continue to trend lower in coming weeks because the global economy is in recession," said Commonwealth Bank currency strategist Kim Mundy.
Flight Centre lifeline
Flight Centre will permanently shut 428 of its Australian stores by the end of July in a desperate bid to stay in business.
It is a major cost cutting strategy, which will cull 40 per cent of the company's domestic store network.
"It is, without question, the most challenging period we have encountered in over 30 years of business," Flight Centre managing director Graham Turner said in a statement to the ASX.
"And it is inevitable that some businesses across our industry will fail, given the significant loss of revenue that they will be experiencing now and for at least the next few months."
The struggling travel agency also revealed it was trying to raise $700 million, by issuing 97 million new shares (at a 27 per cent discount).
Effectively, this will double the number of Flight Centre shares on the market and significantly dilute their value.
The company also said it had managed to borrow an extra $200 million from its existing lenders.
Like the rest of the travel industry, Flight Centre has been hit hard by the COVID-19 pandemic and travel bans across the world, which led to it temporarily standing down 3,800 Australian workers in late-March.
The company's shares have been suspended from trading for almost three weeks, and its share price has plummeted by 78 per cent to $9.91 since the year began.
'Dark-looking' pipe dreams
Every sector was trading higher, with technology, health care and energy among the best performers.
The stocks experiencing the largest gains included Corporate Travel Management (+14.6pc), mining services contractor NRW Holdings (+13.2pc), Seven Group Holdings (+12.3pc), and Pilbara Minerals (+11.9pc).
Australia's "big four" banks have experienced solid gains (up between 3.9 and 4.4 per cent), along with the mining giants BHP (+3.5pc), Rio Tinto (+1.8pc) and Fortescue Metals (+3.8pc).
On the flip side, the biggest falls were seen in travel booking site Webjet (-8.9pc), data centre provider NextDC (-3.7pc), international student-placement company IDP Education (-2.5pc) and shopping centre owner Unibail Rodamco Westfield (-3.2pc).
Some analysts believe the market may be too optimistic, and have not fully priced in the risks of recession, surging unemployment and a slow economic recovery.
The easing coronavirus death toll, in some nations, is "keeping pipe dreams alive … [but] it's a pretty long and dark-looking pipeline", said AxiCorp's chief market strategist, Stephen Innes.
"Sure, the current level of stimulus is tremendous, but it's to bridge over 'stay-at-home' orders and mandated business closures.
"It's impossible to draw a lower bound under the economic effects of COVID-19, given the lack of dependable inputs and no historic precedent of this magnitude to correlate the data."
Oil volatility returns
Oil prices plunged after the world's major producers, the OPEC+ cartel, announced they were delaying today's meeting to Thursday.
It is widely anticipated Russia and Saudi Arabia will end their price war, and the cartel would reach an agreement to cut production to boost oil prices – which have plummeted by more than half since the year began.
The international benchmark, Brent crude, dropped 2.2 per cent to $US33.35 per barrel.
West Texas Intermediate crude fell 3.9 per cent to $US27.25 a barrel.
Despite that, oil markets surged by around 45 per cent last week — their best gain on record — after Mr Trump last week said he expected Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman to reach a deal and cut production by up to 15 million barrels.
Topics: stockmarket, currency, oil-and-gas, mining-industry, company-news, australia, united-states
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