Australia, NZ shares drop as virus spread beyond China rattles sentiment

[BENGALURU] Australian shares posted broad-based declines on Monday as a spike in fresh coronavirus cases outside China deepened concerns surrounding the epidemic's impact on global economy.

The S&P/ASX 200 index was down 2 per cent, or 143.4 points, at 6,995.60, as of 0041 GMT, falling below the key 7,000 level and marking its worst session in nearly three months.

Less than 10 per cent of the stocks in the bourse traded in the black on Monday. The index closed down 0.3 per cent in the previous session.

The International Monetary Fund on Saturday trimmed 2020 growth outlook for China and the world economy, while an uptick in cases in South Korea, Italy and Iran has further dimmed global economic prospects and dampened risk sentiment.

"The alarming aspect is the virus showing up in patients with no connection to China, suggesting that things are about to get extremely problematic and market conditions could get exponentially worse this week," Stephen Innes, chief market strategist at AxiCorp wrote in a note.

Energy stocks slumped up to 3.6 per cent to their lowest in more than four months as oil prices fell over worries that the virus would pinch crude demand.

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Oil index heavyweight Woodside Petroleum Ltd tumbled 5.9 per cent, marking its worst session in more than six months, while Oil Search Ltd declined 3 per cent.

Refiner Viva Energy Group, however, moved against the tide with a 3.7 per cent rise after announcing a A$680 million (S$629.9 million) share buyback plan.

Financials fell to a nearly two-week low, with the so-called "Big Four" banks slipping between 1.5 per cent and 1.7 per cent. Top lender Commonwealth Bank of Australia was down as much as 1.5 per cent.

The tech sub-index tracked declines in China-reliant US peers, that dropped for a second straight session on Friday.

ASX-listed software firm Xero lost 3 per cent, while peer WiseTech Global declined 4.2 per cent.

Bucking the trend, gold miners advanced 4.3 per cent as bullion prices rose after investors flocked to the safe-haven precious metal.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index declined 1.25 per cent or 151.17 points to 11,922.17.

ANZ Research analysts, in a note, said they expected to see the country's growth significantly dented over the first half of 2020, as a long-term disruption to the Chinese economy could hurt imports of key supplies.

ANZ lowered its growth forecast to 2.1 per cent for the year, compared with its previous outlook of 2.5 per cent.

Air New Zealand slumped 5.5 per cent to the lowest since last June, after the flag carrier cut its 2020 outlook citing impact from the coronavirus outbreak.

REUTERS