The benchmark S&P/ASX200 index has closed 5.54 per cent higher on Wednesday at 4,998.10 points after temporarily breaking through the 5,000 barrier in early trade.
A late rally saw the ASX 200 close 262pts or 5.5% higher at 4,998. The index closed higher for the second day in a row for the first time in a month as gains were broad based. Only the health sector ended lower #ausbiz— CommSec (@CommSec) March 25, 2020
As CommSec observed, this is the first time in a month that the index has finished in the green two days in a row.
The broader All Ordinaries index also finished higher, closing 5.32 per cent higher at 5,006.20 points.
The late rally coincided with news from Washington that the US government had agreed to pass the anticipated US$2 trillion stimulus package.
The gains were pulled higher by Qantas which saw shares surge 24 per cent in early trade, and by a vote of confidence for Australia’s banks from ratings agency Standard and Poor’s.
In a briefing note this morning, S&P predicted a sharp correction for Australia’s property market but said the country’s banks should be safe.
“We consider that the fiscal and monetary support announced by the Australian authorities in the past two weeks, in combination with hardship relief measures announced by the banks, should cushion the blow from COVID-19 to property prices, and consequently the banking sector,” it said.
All four banks finished higher on Wednesday, with CommBank notching 9.47 per cent gains, NAB 9.65 per cent and ANZ 11.58 per cent gains. Westpac also saw gains of 9.24 per cent.
What happened this morning?
Australian markets have shot higher on Wednesday morning following the best day for the Dow Jones since 1933.
The S&P/ASX200 was up 6.05 per cent at 5,022.40 points as of 10:16am AEDT, while the All Ordinaries was up 6.06 per cent at 5,041.30 points.
It followed one of the best days on Wall Street since February as stocks lifted on hopes of a massive stimulus package.
What happened overnight?
This morning’s lift comes after the Dow Jones Industrial Average skyrocketed to its best day since 1933 on hopes of a huge US$2 trillion stimulus package.
The Dow rallied more than 11 per cent after it sold-off on Monday, erasing nearly all of the gains since President Donald Trump was elected.
“Sentiment has improved, but to call it a turning point is too strong a word for now,” James McCormick, global head of desk strategy at NatWest Markets said.
“It is more of a tug-of-war. Policy bazooka is in place, but will be fighting against very weak data and still worrying trends on Covid-19 data.”
The US Senate is still hammering out the details, however reportedly will include around US$500 billion in direct payments to people and US$350 billion in business loans.
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