Retailers rebound on ASX
Monday saw the Australian Stock Exchange (ASX) have its worst day since the 1987 Black Monday crash, but retailers are rebounding strongly from the plummet.
Metcash in particular has seen a strong rebound, increasing by close to 38 per cent since Monday, Coles and Woolworths have also seen growth increasing by 19 per cent and 23 per cent respectively since Monday.
One of the factors helping the retailers to recover share price losses is that investment bank UBS has upgraded its rating for each company.
In an investment note UBS said: “We believe COVID-19 will embed new behaviours in consumers, potentially leading to an acceleration in the rate of online penetration (both grocery and fast food) and is likely to see a return to cooking at home, at least in the near term.
“This should in our view provide longer-term benefits to [Coles and Woolworths] in particular as well as accelerating industry consolidation.”
The bank upgraded its Metcash and Woolworths ratings from neutral to buy and upgraded Coles to neutral, which has helped to fuel their stock market recovery.
Financial services company Jefferies also told its clients to “buy the whole supermarket sector” on Tuesday, which it said was because of increased coronavirus-led sales, but also because of a longer-term trend of an increase in food inflation.
Woolworths’ Managing Director of Supermarkets, Claire Peters said the supermarket had seen sales at higher levels than any point in the last year.
“To help our customers understand what we mean when we say ‘unprecedented demand’ we will have hit volumes over the last week and the weeks prior more than we would have seen at Christmas, or ever in the last 12 months.”
Peters also asked customers to be more mindful of others, saying: “No matter how frustrating the customer experience is, which I greatly apologise for, nobody should come to work to be physically assaulted or verbally abused.”
Shop, Distributive and Allied Employees’ Association secretary Bernie Smith added: “If something is out of stock it’s not the checkout operators’ fault or the shelf stackers’ fault, no-one deserves a serve.”
Monday’s crash saw 6.4 per cent wiped off the ASX 200 in the opening half hour, the market then rallied but crashed again to finish the day 7.5 per cent down from its opening value.
Throughout the week, there have been peaks and troughs as the market deals with Government and public responses to the coronavirus pandemic. At the time of writing the ASX sits at 4976.30, 10 per cent down on Monday’s opening value of 5539.30.
The ASX 200 has lost over 30 per cent of value since its highs of 7162.50 in February.