You are here

Australia: Shares fall 3% as WHO declares coronavirus a pandemic

AB_asx_120320.jpg
Australian shares fell nearly 3 per cent on Thursday, following Wall Street as worries mounted over the economic impact of the coronavirus outbreak after world health officials declared the novel flu-like virus a pandemic.

[BENGALURU] Australian shares fell nearly 3 per cent on Thursday, following Wall Street as worries mounted over the economic impact of the coronavirus outbreak after world health officials declared the novel flu-like virus a pandemic.

Investors now await an address by US President Donald Trump, scheduled for 0100 GMT, who had downplayed the risks from coronavirus, but said he would address economics and healthcare in his comments.

The S&P/ASX 200 index declined 2.9 per cent, or 164.7 points, to 5,561.2 by 0027 GMT after Wednesday's more than 3.5 per cent drop. It has lost 22.8 per cent since scaling a record high on Feb 20.

On Wednesday, the World Health Organization declared the virus as a pandemic for the first time, adding that Italy and Iran were now on the frontline of the disease and other countries would join them soon.

The classification added fuel to this week's rout in global equities that started after a price war between Saudi Arabia and Russia sent crude oil crashing.

Wall Street tumbled overnight, with the Dow Jones Industrials shedding 5.86 per cent and entering bear market territory.

Amid the heavy sell-off on Thursday, Australia's A$17.63 billion (S$15.9 billion) economic stimulus plan to limit the economic impact of the virus outbreak provided little relief.

"It is becoming clear that Covid-19 has created a demand shock that threatens activity and inflation," ANZ Research analysts said in a note.

"There will be a significant fiscal response across major economies, but it will go hand-in-hand with a monetary policy response."

An overnight slump in oil prices and weaker commodities squeezed energy and mining stocks. The heavyweight Metals and Mining index dropped 3.8 per cent to its lowest in more than a year, while energy stocks fell 2 per cent.

Miners BHP Group and Fortescue Metals Group lost up to 3.9 per cent and 4.9 per cent, respectively.

Oil Search was the biggest drag on the energy index with a drop of 4.4 per cent, while Woodside Petroleum fell 3.6 per cent.

Gold stocks also declined, with the sub-index plunging nearly 6 per cent to its lowest since June last year, as investors sold bullion to cover margins for losses in the stock market.

Gold Road Resources dropped 9.3 per cent, while St Barbara fell 6.3 per cent.

The "Big Four" lenders were all in the red, down between 1.4 per cent and 2.5 per cent.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index declined 2.6 per cent to 10,591.0.

Movie software maker Vista Group slumped 11 per cent to its lowest in more than two years and was the biggest drag on the benchmark.

REUTERS