The ASX had its best session in 40 years yesterday, surging in the afternoon as the Australian Government announced its latest $130 billion support package. The S&P/ASX 200 Index (ASX: XJO) recorded a massive 7% gain, the largest percentage increase since October 1980. The All Ordinaries (ASX: XAO) was up 6.5% to 5,194.
Major gains
The increase added $98 billion to the value of the ASX, however the ASX 200 is still down more than 27% from its February high. Gainers were led by Ansell Limited (ASX: ANN), which was up 25%. Ansell affirmed its guidance yesterday, saying demand for its hand and body protection products was very strong.
Other major gainers included United Malt Group Limited (ASX: UMG), which commenced trading last week following its demerger from GrainCorp Ltd (ASX: GNC). Shares in United Malt Group were up more than 15% yesterday.
Shares in Nextdc Ltd (ASX: NXT) were up nearly 14%. The data centre operator is experiencing tailwinds from increasing use of online digital technologies during current shutdowns, driven by telecommuting, food delivery, social media, video streaming, and gaming. Shares in Whitehaven Coal Ltd (ASX: WHC) jumped 12.61%, while REA Group Limited (ASX: REA) was up 12.56%.
Some falls
Of course, there were fallers amongst the overall gains, led by Summerset Group Holdings Ltd (ASX: SNZ), which was down 8.74%. Event Hospitality and Entertainment Ltd (ASX: EVT) was down 5.73%, the Centuria Industrial REIT (ASX: CIP) was down 5.36%, and Auckland International Airport Limited (ASX: AIA) fell 5.33%.
But there were certainly more gainers than fallers yesterday, as the latest federal government package brought hope that any economic downturn will not be as dramatic as previously anticipated.
Federal government package
The Australian Government's latest initiative is a $130 billion program to support workers and businesses. A new job keeper payment was announced, which aims to keep workers employed despite the downturn in business.
Businesses will be paid $1,500 a fortnight for every worker they employ where business turnover has dropped by at least 30%. Businesses with annual revenue of $1 billion will need to prove a 50% drop.
The payment is the equivalent of 70% of the median wage and 100% of the median wage in heavily hit sectors such as retail and hospitality. The payment is designed to provide additional income support to keep employees connected to employers through the current business 'hibernation'.
The latest package adds to the $84 billion the government has ploughed into Australia's economic survival during the coronavirus pandemic. State governments have also introduced their own stimulus packages, which range from $65 million in the Northern Territory to $1.7 billion in Victoria.
Foolish takeaway
The market reacted with jubilation to the federal government's latest economic rescue package, its largest to date. Whether yesterday's gains can be retained remains to be seen.
