Australia, New Zealand: Shares fall sharply as virus outbreak raises fears about economic impact

[BENGALURU] Australian shares slumped nearly 2 per cent on Tuesday as the fast-spreading coronavirus drummed up fears over its impact on economic growth and hammered oil and commodity prices.

The deadly virus has killed 100 people so far in China and restricted the movement of tens of millions as investors fret that the severity and spread of the outbreak could hurt economic growth in the world's second-largest economy and beyond.

The benchmark S&P/ASX 200 index plunged 1.8 per cent to 6,964.7, its biggest intraday drop so far this year, with more than 80 per cent of the constituents in the red. Markets were closed on Monday in observance of Australia Day.

"In the near-term, though it's about hedging economic risk, and there is no doubt that there will be an impact on the Chinese economy," said Chris Weston, Melbourne-based Pepperstone's head of research.

The selloff compounded with sharp drops in oil and commodity prices as Australia is a resource-driven economy and heavily dependent on trade with China.

"The outbreak is developing too rapidly to predict with any confidence the final extent of the economic damage. But it is now certain that the outbreak will have a significant impact on China's GDP this quarter," Capital Economics wrote in a note on Monday.

Mining giants BHP Group and Rio Tinto slumped as much as 4.1 per cent and 5.9 per cent, respectively. Rio's fall was its biggest intraday loss in nearly four years.

Oil stocks also fell, with Woodside Petroleum and Santos down nearly 3 per cent each.

Oil Search plunged 7.7 per cent, also dragged by an 11 per cent drop in quarterly revenue.

Qantas Airways dived 6.4 per cent at one point, only to recover slightly to trade 4 per cent weaker.

The only major sector that managed to eke out gains was gold, which found support from higher bullion prices as investors jumped ship to the safe-haven.

The sector rose 1.6 per cent, with Newcrest Mining adding 0.6 per cent.

The country's so-called big four banks also fell between 1.1 per cent and 1.8 per cent.

In New Zealand, travel and tourism-related stocks were the biggest losers and dragged the benchmark S&P/NZX 50 index down as much as 1.4 per cent to 11,636.88.

Tourism Holdings slumped 6.1 per cent, while Air New Zealand and Auckland International Airport were down over 1 per cent each.

REUTERS