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Australia, New Zealand: Shares fall as emergency rate cuts worsen virus fears

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Australia and New Zealand shares fell sharply on Monday as emergency rate cuts in the United States and New Zealand raised worries about bigger-than-expected economic fallout from the coronavirus pandemic.

[BENGALURU] Australia and New Zealand shares fell sharply on Monday as emergency rate cuts in the United States and New Zealand raised worries about bigger-than-expected economic fallout from the coronavirus pandemic.

The Reserve Bank of New Zealand slashed the official cash rate by 75 basis points to an all-time low of 0.25 per cent, as it prepared for a "significant" impact on the economy from the worsening virus outbreak.

Despite the move, the benchmark S&P/NZX 50 index was down 2.4 per cent, or 239.33 points, at 9,587.53 by 0041 GMT.

The US Federal Reserve also surprised markets on Sunday with a 100-basis-point interest rate cut to near zero and said it would expand its balance sheet by at least US$700 billion in the coming weeks.

"A mixture of the Fed's emergency move once again triggering fresh concerns and the fear that the central banks' support may not be enough to cushion the impact had the risk-off mood raging across the market into the start of the week," said Jingyi Pan, a market strategist at IG.

Auckland International Airport and Serko plunged 13.8 per cent and 20 per cent, respectively, after they suspended their earnings forecasts due to stringent border controls imposed by New Zealand to combat the fast-spreading coronavirus.

In Australia, the benchmark S&P/ASX 200 index slid 5.3 per cent, or 291.10 points, to 5,228.20. The index had reversed course to end 4.4 per cent higher on Friday in its biggest daily gain in more than 11 years.

The sell-off on Monday was driven by "fear and loathing", said James McGlew, executive director of corporate stockbroking at Argonaut.

He added that "the broader concern going forward is that with interest rates almost zero right now, if this does not work, what would?"

Energy stocks were among the biggest drags, tumbling nearly 8 per cent, with sector heavyweight Woodside Petroleum slumping as much as 9.8 per cent.

Financials slipped 6.1 per cent, with all the "Big Four" banks in the red.

Hearing implant maker Cochlear Ltd slumped as much as 21.6 per cent after scrapping its full-year earnings forecast and was the top percentage loser in the benchmark.

Anglo-Australian miner BHP Group slid more than 6 per cent, while its rival Rio Tinto dropped over 5 per cent.

REUTERS