Australia: Shares fall as near-term growth outlook hit by virus fears

[BENGALURU] Australian shares fell on Friday for their second straight weekly loss, as the country's central bank forecast slower growth in the near term following the coronavirus outbreak that has continued to grip global markets.

The S&P/ASX 200 index closed down 0.4 per cent to 7,022.60, after rising 1.1 per cent on Thursday. On a weekly basis, the benchmark slipped 0.08 per cent.

The Reserve Bank of Australia (RBA) on Friday cited the fast-spreading virus and the bushfires in the country, as it slashed forecasts for domestic economic growth in the near term to 1.9 per cent in the year to June, down from a previous prediction of 2.6 per cent.

The viral outbreak emanating from China, which had claimed more than 600 lives as of Thursday, could shave 0.2 percentage point off Australia's economic output in the current quarter, RBA said.

"Global growth is now likely to slow further in the first quarter of this year, taking it to its weakest rate since the global financial crisis... the recovery, when it does come, will be both slow and uneven," said analysts at Capital Economics.

Central bank governor Philip Lowe said the virus outbreak represented a new source of uncertainty, adding that the risks to Australian economy would be "large".

The energy sub-index declined 1.7 per cent at the close, while marking its fourth consecutive weekly loss.

Beach Energy Ltd fell 4 per cent to close at its lowest since Dec 5, while Woodside Petroleum Ltd shed 1.5 per cent.

Mining companies, which sell most of their produce to China, closed down 1.1 per cent as Australian miners braced for a cyclone, leading iron ore to mark its biggest weekly loss since early August last year.

BHP Group Ltd ended nearly 2 per cent lower, while Rio Tinto Ltd finished about 1 per cent weaker.

The financials sub-index declined 0.2 per cent, with three of the "Big Four" banks ending in the red. National Australia Bank edged down 0.1 per cent, while Westpac Banking Corp lost 0.6 per cent.

Bucking the trend, gold stocks ended 1.7 per cent higher as investors scurried to safe-haven assets. Bellevue Gold and Gold Road Resources each ended more than 9 per cent higher.

New Zealand's benchmark S&P/NZX 50 index finished 1.4 per cent higher at 11,760.88. This week, the New Zealand benchmark gained 0.4 per cent, compared with last week's 1.4 per cent decline.

Kathmandu Holdings Ltd, the top percentage gainer in the index, rose 12.8 per cent after the outdoor retailer forecast a nearly 40 per cent rise in its first-half group underlying operating earnings.

REUTERS