Australia, New Zealand: Shares a sea of red as virus fears resurface

[BENGALURU] Australian shares dropped 3 per cent for a second straight session on Friday, tracking losses on Wall Street as investor fears over a possible resurgence of Covid-19 infections were aggravated by the dour outlook from the US Federal Reserve.

Wall Street tumbled overnight in broad-based selloff a day after the Fed warned of a "long road" to recovery in the economy amid a report the US coronavirus death toll may reach 200,000 at some point in September.

The S&P/ASX 200 index dropped 3 per cent or 177.5 points to 5,783.1 by 0044 GMT, having closed 3.1 per cent weaker on Thursday. The index is set to fall nearly 2 per cent this week, its biggest weekly drop since April 24.

Energy stocks plunged as much as 6.1 per cent to their lowest level in three weeks and accounted for most of the losses on the benchmark as crude prices fell.

Shares of Oil Search and Worley slumped 8.3 per cent each.

Financial stocks dived 4.6 per cent to their lowest since June 3. The so-called "Big Four" banks lost between 3.5 per cent and 5.4 per cent.

Elsewhere, Australia's mining stocks dropped 2.8 per cent as prices of iron ore, copper, aluminium and other industrial metals slumped.

Gold stocks, which had rallied in the previous two sessions on safe-haven buying, also edged lower with spot bullion prices trading flat.

Of the index's 200 stocks, just one traded in the green as of 0043 GMT.

New Zealand's benchmark S&P/NZX 50 index recouped much of its earlier losses to trade down 2.2 per cent or 250.2 points to 10,904.8. Earlier in the session, the index declined as much as 4.6 per cent in its worst sell-off since the markets crashed in March.

The benchmark extended losses into a fourth straight session even as the country's manufacturing activity showed some signs of recovery in May.

REUTERS