Australia: Shares end marginally lower on country's bleak outlook
[SYDNEY] Australian shares closed marginally lower on Wednesday, with the heavyweight financial sector leading losses, as market participants fretted over the impending economic fallout from the coronavirus pandemic.
The S&P/ASX 200 index settled about 0.9 per cent lower at 5,206.90, after falling as much as 2.9 per cent earlier in the session. The benchmark finished 0.65 per cent lower on Tuesday.
Australian markets took a hit after global credit-rating firm Standard & Poor's lowered its outlook on the country's coveted 'AAA' rating to "negative" from "stable", saying the government's massive fiscal packages to cushion the economic blow from the pandemic could lead to a sharp rise in the country's debt position.
Citing the threat of prolonged economic downturn, the government is looking to pass an emergency A$130 billion (S$113.9 billion) stimulus package to subsidise the wages of 6 million Australians.
With the country's unemployment rate expected to double to nearly 10 per cent, most economists predict the worst recession in Australia's history.
"Government stimulus is about delaying the inevitable blow out in unemployment that started to rise in 2019. We are now going to have a substantial pop in unemployment, and once again in September as the subsidy rolls out," said Mathan Somasundaram, strategist at brokerage Blue Ocean Equities.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Meanwhile, adding to the broader gloom, Australia's prudential regulator asked banks and insurers to consider deferring dividend payouts.
This, along with a downgrade by Fitch Ratings on all "Big Four" banks, led the Australian financial index to fall 2.8 per cent at close - the day's biggest laggard. The "Big Four" lenders ended 3.33 per cent to 5.3 per cent lower.
Across the Tasman sea, the New Zealand benchmark S&P/NZX 50 index finished 2.3 per cent higher at 10,031.66.
Tourism, leisure and entertainment company SkyCity Entertainment rose 8.8 per cent while utilities provider Infratil gained 7.2 per cent.
REUTERS
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Capital Markets & Currencies
Europe: Stoxx ends lower as auto giants weigh; investors parse inflation data
US: Wall Street stocks fall as markets weigh strong wage data, Fed meeting
Japan may have spent 5.5 trillion yen on Apr 29 intervention, BOJ data suggests
Singapore stocks rise, tracking regional bourses; STI up 0.3%
Asia: Markets build on Wall Street rally, yen holds bounce
Singapore shares open in the red on Tuesday; STI down 0.3%