Australia: Shares claw back losses on stimulus hopes; NZ ends lower

[BENGALURU] Australian shares closed at a nine-month low on Monday, but well off their session lows, amid rising expectations of central bank stimulus to help weather the economic fallout of the coronavirus outbreak.

The country's financial regulators were in an emergency meeting on Monday to discuss the impact of the coronavirus outbreak on the economy, two sources familiar with the matter told Reuters.

The meeting comes as markets now expect the Reserve Bank of Australia to cut its cash rate as early as Tuesday at its scheduled monthly review.

The S&P/ASX 200 index ended 0.8 per cent lower at 6,391.50, posting its seventh consecutive session of losses. The index tumbled as much as 3 per cent earlier in the session, dented by a sharp contraction in Chinese factory activity and the rapid spread of the virus.

Hopes of a coordinated global monetary policy response also helped Asian shares steady from early losses on Monday, with MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.4 per cent, turning around from a loss of about 0.3 per cent earlier in the day.

Further monetary policy easing by central banks around the world looks increasingly likely, "as both a confidence-boosting measure and to counter the still-uncertain impact on demand", said Michael Gordon, a senior economist at Westpac.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Westpac expects a 25 basis points (bps) cut from the Reserve Bank of Australia on Tuesday and a 50 bps cut from the US Federal Reserve after its meeting in mid-March.

The heavyweight financial sector led the declines, with all the "Big Four" banks shedding between 1.6 per cent and 2.5 per cent.

Top lender Commonwealth Bank of Australia finished 1.6 per cent lower in its sixth consecutive session of losses, while second-largest bank Westpac Banking Corp declined 1.9 per cent.

The mining sub-index ended 0.9 per cent lower. Fortescue Metals Group posted its biggest intraday fall in nearly four years, down 9 per cent, as the iron ore-focused miner traded ex-dividend.

The energy sector rebounded from a nearly 3 per cent loss to end 1.1 per cent higher, as oil prices rose on expected production cut from the Organization of the Petroleum Exporting Countries and stimulus hopes from central banks.

Heavyweights Woodside Petroleum and Santos Ltd added 1.5 per cent and 2.9 per cent, respectively.

In New Zealand, the benchmark S&P/NZX 50 index lost 1.4 per cent to 11,103.43, its lowest close in over three months.

Auckland International Airport declined 3.6 per cent to finish at its lowest in nearly a year, while the NZ-listed shares of Westpac Banking Corp shed 2.1 per cent.

REUTERS