Bear market rallies can be huge, exciting and in the end, often mark a false dawn.
And that is exactly the playbook the Australian exchange followed to the letter this week with a spectacular three-day rally which all came to a grisly end on Friday as the market slumped from being up 2% in early trade to being down 5.3%.
That left the ASX 200 index down 270.9 points to 4842.4 points, erasing most of the rebound seen in the previous three sessions and leaving the index up just 0.5% for the week.
It is an absolutely massive 7.3% reversal and probably not the last one we will see as uncertainty about the progression of the coronavirus and its effect on the global economy is reflected in temporary bouts of optimism followed by rapid confirmation that the bears are still in charge.
Rally fizzles on thin volumes and collapsing confidence
The fizzling out of the three-day rally did not come as a shock to many traders who were unconvinced by the thin volumes and lack of conviction from the buyers, many of whom were merely chasing the rally so they weren’t left out.
Property stocks smashed as rents remain unpaid
By the end of Friday no sector was left untouched with real estate investment trusts (REIT’s) tumbling 8.7% following Solomon Lew’s declaration that none of his Just Jeans, Smiggle, Peter Alexander, Jay Jays, Portmans, Jacquie-E and Dotti stores would be paying rent during the coronavirus shutdown.
Lew’s Premier investments (ASX: PMV) stood down 9,000 staff across their stores and declared no rent would be paid to landlords, sending a massive shiver through the property trust sector.
Property wasn’t alone in feeling the pain of the sell off with the healthcare sector also down 7.1% with heavyweight CSL (ASX: CSL) down 7.6% to $279.12.
Banks smashed again
It was another awful day for the big banks too, which had rallied hard, only to retrace downwards with massive falls.
All four banks were down by at least 6.3% with ANZ the worst of them all with a 7.4% fall to $15.47.
Some of the other stocks that had rallied earlier in the week such as Wesfarmers (ASX: WES) and toll road company Transurban (ASX: TCL) both skidded by 7.2% as investors turned to cash for the weekend to avoid more uncertainty.
Tuesday’s 11.4% share spike on Wall Street may have been the biggest one-day rally since the Great Depression but it also looks similar, in that the Depression years were full of big jumps and falls.
Big bounces are common as part of an overall downtrend and until there is some certainty around the economic effects of the global pandemic, we are probably in for a lot more volatility with big percentage moves in both directions.
Small cap stock action
The Small Ords index rose 1.71% for the week to close on 2013 points.
Small cap companies making headlines this week were:
HeraMED (ASX: HMD)
HeraMED is one of the latest companies to benefit from the COVID-19 global pandemic, after it revealed it was in “advanced discussions” with “world leading” healthcare providers and insurance companies.
As a result, HeraMED is looking to expedite development of its HeraCARE maternity telehealth platform that enables remote monitoring and treatment of pregnant women.
During a conference call on Thursday, HeraMED chief executive officer and co-founder David Groberman said the spread of COVID-19 has created a critical need for pregnant women to self-isolate and avoid high risk doctors’ offices and hospitals.
Health entities and governments have voiced the need for expanded telehealth services and a “comprehensive” home-based approach for these pregnant women.
This need has prompted inquiries to HeraMED that has now led to “advanced” discussions regarding deployment of the telehealth maternity platform.
Lifespot Health (ASX: LSH)
After receiving market requests, Lifespot Health had deployed Australian and international resources to further develop and complete the BodyTel App and platform extension to incorporate temperature monitoring and a branded Bluetooth thermometer.
According to Lifespot, there is a large unmet need globally for fever tracking due to the COVID-19 pandemic.
Under the Australian Government’s COVID-19 guidelines ongoing self-monitoring of COVID-19 symptoms are recommended including fever, coughing, sore throat, fatigue and shortness of breath.
Lifespot’s Bodytel system already has the capability to track blood sugar, ECG, blood pressure and weight via existing Bluetooth connected devices.
“Extending the platform to track fever via body temperature is a commercially low risk, yet logical extension to the platform and can currently address the large unmet need for globally for this function arising from the COVID-19 pandemic,” the company stated.
As a result, Lifespot is in negotiation with a pharmacy channel distributor in Australia to begin the national and Asia Pacific roll-out.
ResApp (ASX: RAP)
Another digital health company to benefit from the current situation is ResApp Health, which will deploy its ResAppDx-EU respiratory diagnostic technology on Phenix’s telehealth smartphone app.
Phenix is a mobile clinic software developer and online virtual clinic provider.
Under the agreement, ResApp’s acute respiratory diagnostic test will be integrated into Phenix’s telehealth smartphone app over the next three months.
During this time, both companies will negotiate the specifics of a fee-per-test payment model of using ResAppDx-EU on the Phenix app.
ResApp chief executive officer and managing director Tony Keating said ResApp was the only solution to accurately diagnose respiratory conditions through telehealth and will provide telehealth clinicians with a remote testing capability to manage the COVID-19 pandemic.
“By assisting general practitioners to evaluate patient symptoms during a telehealth consultation, in particular if an infection has reached the patient’s lungs, GPs will be better able to determine whether a patient should attend a hospital or clinic for additional care, conserving strained healthcare resources,” Mr Keating added.
TALi Digital (ASX: TD1)
Early childhood technology business TALi Digital plans to accelerate the marketing of its TALi platform following testing of more than 1,000 Australian school-aged children.
In October last year, TALi deployed its TALi Detect digital game-based platform across a random group of children in Victoria’s public education system.
The deployment of the attention enhancement tool was to test the product and validate its model.
From data collected to date, TALi identified about 13% of children tested had a higher level of inattentive performance.
“These initial results from the first 1,000 school-aged children to have used TALi Detect are very pleasing as they show that the program can be deployed in real-life school conditions with very high customer satisfaction ratings and may provide the foundation for further interventions such as our TALi Train program,” TALi managing director Glenn Smith said.
“These are only initial results of the first randomly selected children to have used the program.”
“We have now assessed, or are in the process of assessing, more than 5,000 children across schools in Australia and will accelerate the marketing of the TALi platform,” Mr Smith added.
Structural Monitoring Systems (ASX: SMN)
Structural Monitoring Systems has secured its “long anticipated” stage II FAA issue paper, with the Supplemental Type Certificate expected soon after.
The Supplemental Type Certificate is anticipated in the third quarter of this year and will give the company approval for using its CVM technology for aircrafts.
Structural Monitoring Systems’ technology has been developed to monitor and test the structural integrity of various materials and products such as aircraft, ships, power plants and rolling stocks.
The company now plans to leverage its commercial partnerships with Delta Air Lines, Delta Engineering and Sandia Labs to secure full commercial approval to use CVM for WiFi antenna structure inspections.
Structural Monitoring Systems hopes to complete the final certification requirements by the end of the year, although doubt has been cast due to the unknown impact of COVID-19.
Whispir (ASX: WSP)
Another SaaS company to benefit from COVID-19 is Whispir, which has been contracted by the Victorian Government’s Department of Health and Human Services to interact with people in the state who have been in contact with a COVID-19 patient and who meet the criteria for self-isolation.
The department will deploy Whispir’s SaaS communications workflow cloud-based platform as part of its wider COVID-19 containment plan.
The platform will be used for secure and interactive two way text messaging to select individuals to gain greater insight into their daily health.
It is expected this information will enable to quickly confirm if a person is complying with mandatory self-isolation, or if they are experiencing symptoms and have undergone testing.
The information will be different to a simple text message, in that recipients will be asked to answer a series of questions including recent activities, health and whether they are adhering to isolation restrictions.
Whisper chief executive officer Jeromy Wells said the platform will provide immediate and substantial benefit to the community.
The week ahead
Once again, developments in the fight against the novel coronavirus will be the number one, two and three biggest issues as markets continue to look for certainty amidst the turmoil.
Also central for investors will be the various packages pulled together by various governments to keep their economies ticking over as unemployment soars and whole sectors the economy stall.
In that context, a lot of the statistical releases which would normally be the focus of investor attention are of more historical interest given the rapid collapse of the global economy into a recession.
Here in Australia, the main data being released is on home prices, building approvals, retail trade and purchasing manager surveys from CBA and AiGroup.
Perhaps of more interest will be the minutes for the Reserve Bank’s latest board meeting, given we have just emerged from a week of successful bond buying by the RBA.
In China there are purchasing manager indexes to be released while in the US data on jobs, consumer confidence, factory and services data are out.