Australia: Shares end lower as pandemic-driven recession fears mount

[BENGALURU] Australian shares ended weaker on Friday, as financial stocks led the benchmark to erase early gains, while investors continued to abandon their bets over forebodings about a deep pandemic-driven global recession.

The S&P/ASX 200 index ended 1.7 per cent down at 5,067.50, after climbing as much as 1.8 per cent earlier in the day. However, on a weekly basis, the benchmark settled 4.4 per cent higher, its best week since April 15, 2016.

"The market is probably partly fading ahead of the weekend which brings with it quite a bit of uncertainty (Covid-19's growth rate, any government action etc)," said Steven Daghlian, market analyst at CommSec.

"Also, while markets aren't as volatile as they were just a week ago (for now), we can still expect these types of swings due to plenty of uncertainty that we're still faced with."

New South Wales, the epicentre of the coronavirus outbreak in Australia, warned that health authorities were grappling with an increased number of cases without a known source, which could make dealing with the spread difficult.

Financial stocks were worst performers, falling 2.1 per cent at close, with all the "Big Four" banks ending in the negative territory. The heavyweight sector, however, rose 4.2 per cent on a weekly basis, its best week since May 24, 2019.

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Analysts say the "Big Four" may cut dividends in coming weeks to save their capital buffers against the fallout from the coronavirus pandemic, tracking similar moves in Europe and New Zealand.

Brokerage Jefferies said in a note that any ban on Australian banks paying out dividends would be bad, not just for them, but for the broader economy.

The healthcare sub-index finished 1.7 per cent lower, dragged lower by sector heavyweights CSL's 1.4 per cent fall and 4.2 per cent drop by Cochlear.

Energy stocks closed 0.3 per cent higher, coming down from a 10 per cent leap early in the session, as oil prices fell.

Santos closed 0.5 per cent up, after seeing highs of as much as near 16 per cent earlier in the day, while Oil Search finished 4.6 per cent firmer.

Bucking the overall sombre trend, miners closed 1.3 per cent higher, as iron ore prices jumped after the Brazilian government ordered to halt operations at 47 mining dams due to their stability issues.

BHP Group ended the session 1.6 per cent higher, while peer Rio Tinto climbed 1.8 per cent at close.

New Zealand's benchmark S&P/NZX 50 index rose 0.7 per cent to finish the session at 9,935.18.

Tourism Holdings advanced 7.5 per cent at close, while Restaurant Brands New Zealand gained 6.1 per cent.

REUTERS