Australia: Shares drop as global virus cases climb, US stimulus deal stalls

[BENGALURU] Australian shares closed at a near three-week low on Tuesday, as a rise in cases of the novel coronavirus around the world and fading hopes on a timely US stimulus deal stoked fears of a prolonged global economic pain.

The S&P/ASX 200 index fell 1.7 per cent to 6,051.00, its lowest close since Oct 7.

Record daily cases in the United States, Russia, France and many other countries, and a lack of progress in US stimulus deal talks pulled global markets lower. Wall Street's main indexes too closed down overnight.

"We are now past the time for a stimulus agreement in the United States. This now means that nothing will be forthcoming until, say, February 2021," said Brad Smoling, managing director at Smoling Stockbroking.

Markets are starting to realise the possibility of a bank failure either in the United States or Europe due to untimely stimulus and possible further lockdowns from higher virus numbers, Mr Smoling said.

Denting sentiment further was a Reuters poll that showed lower immigration and high unemployment will keep the Australian recovery's path uneven despite the worst having passed for the economy.

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Energy stocks were the top losers, closing nearly 3 per cent lower as oil prices dropped.

Santos tumbled 3.6 per cent and Woodside Petroleum closed 3.3 per cent down.

Miners shed 2.2 per cent, with BHP Group and Rio Tinto each falling about 2.5 per cent.

The heavyweight financial index fell 1.3 per cent, with the "Big Four" banks losing between 0.8 per cent and 1.4 per cent.

New Zealand's benchmark S&P/NZX 50 index ended 1.8 per cent lower at 12,251.91, a near three-week low.

New Zealand posted a monthly trade deficit of NZ$1.02 billion (S$927.2 million) in September, compared with NZ$353 million in August, data from Statistics New Zealand showed on Tuesday.

REUTERS