Australia: Shares close at 3-week low on virus fears; NZ drops

[BENGALURU] Australian shares dropped on Monday, in line with broader Asia, as financial markets in China slumped on fears that a fast-spreading coronavirus epidemic would slow global economic growth.

The S&P/ASX 200 index fell 1.3 per cent to 6,923.3 points at the close of trade, its lowest in three weeks. The benchmark rose 0.13 per cent on Friday.

"There is very clear commitment in today's selling with volumes well ahead of the average. Investors are looking for safe havens and moving away from riskier assets." said Michael McCarthy, chief market strategist at CMC Markets.

Trading volumes during the session were 1.2 times of the 30-day average, according to Refinitiv data.

Mining stocks dropped 1.3 per cent and dominated the losses after metals prices in China slumped. BHP Group and Rio Tinto Ltd lost 2.6 per cent and 1.9 per cent, respectively.

Investors on Monday dumped equities and commodities futures in China, Australia's biggest trade partner, as markets resumed trading after an extended Lunar New Year break.

In a move to soothe frayed nerves, China's central bank injected 1.2 trillion yuan (S$234 billion) of liquidity into the markets and cut reverse repo rates by 10 basis points.

However, a drop in oil prices sent Australian energy stocks 4.1 per cent lower to their weakest close in over two months.

Oil Search Ltd dropped 7 per cent after negotiations on the P'nyang gas project between Papua New Guinea and Exxon Mobil collapsed.

Financials fell more than 1 per cent, with the "Big Four" banks losing between 0.7 per cent and 1.8 per cent.

Investors now await the central bank's interest rate decision on Tuesday, with policymakers expected to hold the cash rate at a record low of 0.75 per cent, according to a Reuters poll.

New Zealand's benchmark S&P/NZX 50 index fell 1.4 per cent to its lowest close in three weeks.

Shares of a2 Milk Co Ltd, which has a large customer base in China, ended 2.3 per cent lower, while Restaurant Brands New Zealand Ltd lost 2.6 per cent.

REUTERS