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Following the highest number of coronavirus cases in a single day, the Premier of Victoria, Daniel Andrews reinstated “Stay at Home” restrictions across metropolitan Melbourne and Mitchell Shire from 11:59 pm on Wednesday 8 July. The Treasurer warned that the cost of locking down Victoria could be up to $1 billion a week which will fall heavily on businesses.
Local investors mull the worsening economic situation that will hit the Aussie economy following the Melbourne lockdown.
Faced by the resurgence of infections in other countries as well, global stocks seemed to have paused on Tuesday. Following Wall Street’s leads and the lockdown announcement of Victoria, the ASX is trading in a sea of red on Wednesday. To the exception of the Consumer Staples sector which constitutes of stocks of companies and businesses that manufacturers or distributes essential products, most sectors are trading in negative territory:
Source: Bloomberg Terminal
Looking at the best and worst performers, we can see that gold-related stocks were outperforming. The precious metal rallied to multi-year high and is trading just below a key psychological level of $1,800 lifted by safe-haven demand. Northern Star Resources in its June Quarter Trading updated advises that its cash, bullion and investments rose by 40% to A$769.5 million at June 30, 2020, up from A$551.4 million at March 31, 2020. The gold producer’s share price is currently up by 6.5% at $14.84.
Source: Bloomberg Terminal
As of writing, the ASX200 was trading 1.4% or 81 points lower to 5,932.
Amid a relatively subdued calendar, the Aussie dollar is mostly left at the broader sentiment of the markets. On Tuesday, the RBA Interest Rate Decision and Statement was the main event for the Antipodean currency. As widely expected, the RBA kept interest rates unchanged at 0.25% but highlighted the uncertainty of the nature and speed of economic recovery. The Aussie dollar which was trading just below 70 US cents before the RBA’s statement and the lockdown announcement retreated to the downside. As of writing, the Aussie dollar was trading lower at 69.40 US cents.
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