ASX reaches three-week high as risk appetite rises

Investors continue to shrug of concerns over the coronavirus with Australia’s market reaching the highest value in three weeks on Tuesday, and taking 24 companies in the S&P/ASX 200 index up to one-year highs. Trading took a ‘risk-on’ attitude with investors snapping up stocks that dipped on profit warnings or poor results, and volatility indices remain at long-term average levels.

The continuing buying comes from confidence among traders – even when faced with the rising death toll and spread of the virus – that governments and regulators want to avoid a market crash, according to the equities research team at Macquarie.

Challenger CEO Richard Howes. Shares gained more than 10 per cent on Tuesday after reporting a $220 million profit. Credit:James Brickwood

“We argued that if its spread and death rates are contained, ‘biology is no match for ample liquidity and low-cost of capital’,” Macquarie said.

“In other words, despite terrible headlines and warnings of growth downgrades, investors will look through it, betting that neither central banks nor governments will allow any meaningful compression of asset prices, as it is assets that now determine economic outcomes.”


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