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Australian shares shoot up $38 billion: What coronavirus?

·2-min read
Emergency medical workers on the left, stockbroker rejoicing in the centre and Philip Lowe on the right.
Australian shares have spiked up Tuesday after a similar rally overseas overnight. (Images: Getty)

Update: This article was updated with the Reserve Bank cash rate decision.

After seven consecutive days of losses, the Australian sharemarket has bounced back.

The ASX200 index was up 1.64 per cent in the first 30 minutes of trading on Tuesday morning, which is roughly a gain of $38 billion. The All Ordinaries rose 1.75 per cent.

The rise follows massive gains in the US overnight, with the Dow Jones index jumping 5.1 per cent, which set a new single-day record.

The rebound was triggered by expectations that central banks around the world would come to the rescue with interest rate cuts and other emergency measures to counter the devastating impact of the coronavirus, or COVID-19, outbreak.

And the Reserve Bank of Australia has come to the party, announcing Tuesday afternoon that it would cut the cash rate by 25 basis points to an all-time low 0.5 per cent.

Tuesday morning's rebound, as large as it is, still leaves the Australian sharemarket well down on the highs of two weeks ago.

The ASX200 was at a historic-high 7,162.5 points at close of trading on Thursday February 20. Even after the rally on Tuesday morning, the index sat at 6,481.9 points – meaning shareholders and superannuation savers are still down 10 per cent from just a week-and-a-half ago.

The dip has seen some investors take advantage, buying up bargains as well as safe-haven sectors and commodities.

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