ASX 200 wrap: index starts the week down almost 5%

Australia’s benchmark index couldn’t hide from the oil price collapse as Virgin Australia went into voluntary administration.

ASX 200 shares tumble after bull rally

ASX 200 shares have lost almost 5% over the last two sessions with energy shares leading the falls as oil prices collapsed.

The benchmark Australian index lost 131.7 points, or 2.5%, to finish Tuesday’s session at 5,221.5 points after Wall Street was dragged down by energy stocks.

It’s been a rough start to the week for ASX 200 shares. Combined with Monday’s falls, Australian shares have shed 4.9% in just two sessions. The ASX 200 is coming off a recovery of almost 24% since 23 March.

Energy shares led the decline, with the ASX 200 Energy index down 4.8%. Healthcare wasn’t far behind, down 4.7%; while the Financial index dropped 3.6% and the Materials index was down 3.5%.

Energy shares fall, Virgin puts travel in focus

It was the energy shares that did the damage. Investors had to digest news that May contracts for US West Texas Intermediate (WTI), America’s benchmark oil price, had turned negative for the first time in history. This means producers have to pay buyers to take the commodity off their hands.

Woodside Petroleum, Australia’s largest oil and gas company, fell 5.5% across the first two trading sessions of the week to finish at A$19.92. Rival Santos tumbled 6.1% to end Tuesday’s session at A$4.03.

Oil Search told investors on Tuesday that its Q1 production had increased 5%, but revenue had slumped 20% due to the timing of shipments and the collapse in the oil price. The company’s shares finished down at $2.49 per share, which is 9.1% off from Friday’s close.

Petrol company Caltex clawed back some ground on Tuesday after a dive of 7.8% on Monday. The company’s shares are down 6.7% so far this week, last trading at $21.99 per share. Caltex had been the subject of an $8.8 billion takeover offer from Canadian company Alimentation Couche-Tard. The deal however was yesterday called off, due to the increased uncertainty as a result of the Covid-19 pandemic.

Elsewhere, Virgin Australia, which was started by UK billionaire Sir Richard Branson, entered voluntary administration to restructure and refinance the business. Virgin Australia has been looking for suitors and government assistance. The company’s shares last traded on April 9 at 8.6 cents, down 42% for the year.

Virgin’s main rival Qantas rose on Tuesday to $3.60, but its shares are still down 3.2% for the week. Travel company Webjet put out a statement saying it wouldn’t be materially impacted by Virgin’s announcement. Even so, its shares have still fallen 6.9% since Monday’s open.

Meanwhile, Sydney Airport Holdings retreated 7.6% to $5.80 after telling the market on Monday of a 45% drop in passenger traffic in March. Data in the second half of the month had slowed to a trickle.

Investors hid in gold stocks, with Evolution Mining up 5.3% to $4.99.

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