CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

3 ASX ‘defensive’ stocks to watch during the corona-economy

We take a look at how some of Australia’s best-known defensive stocks have performed in recent times, as global market volatility spikes as a result of Covid-19.

CSL share price: a strong outperformance

The volatility in ASX 200 shares since the coronavirus seized global markets has investors scrambling for defensive stocks to level out their portfolios.

Since peaking at 7,197 points on February 20, the ASX 200 tumbled 39% to 4,402 points on 23 March. It has since rebounded to finish today’s session at 5,238 points, representing a 27% decline from its peak.

Against this backdrop, the share price performance of some of Australia’s tried and true defensive stocks – CSL, Telstra and Sydney Airports – has been quite varied. This reflects the context with which each company met the coronavirus crisis and, in one obvious case, an unfortunate dose of bad luck.

Starting with CSL, one of Australia’s greatest business success stories of the last few decades.

When the ASX 200 shares peaked in February, CSL shares were changing hands at $339.42 per share. The company’s shares finished today at $313.00 per share, a drop of just 7.8%, giving it a market cap of $141 billion.

On 8 April, CSL affirmed its guidance for the full year. This was met with obvious approval from relieved shareholders, even if the company had to delay capex and clinical trials due to coronavirus risk.

Overall, the biotech behemoth said there was no interruption to its supply chain. Even its facility in Wuhan, China, ground zero for the crisis, has resumed operations.

While most Australian businesses have seen a decline in sales, CSL has actually experienced a rise in demand for its intravenous immunoglobulin and influenza vaccines.

The company also got some great publicity for joining forces with rival SAB Biotherapeutics, via its CSL Behring arm, to develop a coronavirus treatment.

Telstra share price remains solid, Sydney Airport grounded

Telecommunications giant Telstra has performed far better than the ASX 200 in the last two months.

Its share price has fallen 19% since February 20 to close today’s session at A$3.04. This is comfortably better than the benchmark Australian index. As a defensive stock, technically speaking, it’s doing its job.

Interestingly, Telstra is Australia’s most widely held stock by small investors because of its historically high dividend. However, the company had to start cutting its dividend in recent years due to a revenue crunch. In 2015, its share price was more than double its current levels.

To appease frustrated shareholders, the company started laying off staff. But the coronavirus pandemic has halted this program. Telstra has also decided to double-down on its expensive 5G rollout.

Meanwhile, Sydney Airport represents one of the unluckiest defensive stocks in the current market.

Its share price is down 30.7% since 20 February, which is worse than the ASX 200. Positively at least, the company has secured extra bank debt facilities worth $850 million.

Data for the first 16 days of April showed international passenger traffic plunging 96.1%, with domestic passenger traffic tanking 97.4%.

While Sydney Airports has lost some lustre with plans to build a second airport for Sydney, its share price reflects the nature of the coronavirus pandemic – a disaster for travel stocks.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.