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The ASX lost 5.6% on Friday, after trying its best to follow a surging Wall Street and launch a bull market of its own amid rising coronavirus cases

Jack Derwin
  • The ASX had looked set to mount a five-day rally this week, with the index rising more than 2% on Friday in early trade.
  • Australia has all week followed the lead of Wall Street, with the Dow Jones gaining 21% in just three days on the back of a $US2 trillion stimulus package.
  • It comes as confirmed coronavirus cases rise in both Australia and the US, with the latter overtaking China dn Italy overnight to become the global coronavirus epicentre.
  • Visit Business Insider Australia's homepage for more stories.

The ASX 200 opened strongly on Friday, lifting around 2.25% in the first 10 minutes of trade, and looking to extend its four-day rally. But it was shortlived, eventually losing 270 points, or 5.6%, by the session's close.

It came after Wall Street seemingly shrugged off coronavirus fears this week, with the Australian sharemarket eager to imitate the bluster.

Overnight, the Dow Jones Index soared more than 1,350 points higher, or 6.4%, with the Nasdaq and S&P 500 following suit. In total, the Dow has gained some 21% in just three days, after the US government passed a stimulus package worth $US2 trillion -- larger than the entire Australian economy.

It's enough to return the Dow to a technical bull market -- gaining more than 20% -- just days after it, along with Australian and global sharemarkets, entered the fastest bear market on record. Despite that, the Dow still remains 23% down off its February heights.

It shows the enormous volatility that has gripped markets in recent weeks, since investors sat up and took notice of the health and economic crisis threatened by COVID-19.

Friday has proved however that the ASX is unable to follow its momentum. While the local sharemarket had fallen down by a similar margin to Wall Street over the last month -- 35% off its record high achieved in February -- it's so far only managed a fraction of the recovery of its American counterparts, which even now appears to be faltering.

Meanwhile, COVID-19 cases only continue to climb in both countries. As its markets soared overnight, the US became the new global coronavirus epicentre, with a confirmed case tally of 82,404 – topping China and Italy.

While Australia's own tally sits just shy of 3,000, both scores are growing quickly and aren't expected to peak for some weeks yet.

Given that, the stock market recovery indicates investors are trying to see through the crisis, despite a true economic recovery being some time away yet.