Australia: Shares gain amid China virus fears

[BENGALURU] Australian shares rose nearly half a per cent on Friday on the back of financials, while trading was cautious as fears mounted about the coronavirus outbreak in China and its potential economic fallout.

The World Health Organization declared the virus that has killed 25 people in China and infected more than 800 "an emergency in China" but stopped short of declaring the epidemic of international concern.

Being part of the Asia Pacific region, the Australian market is seen as defensive, said Liu Jun Bei, a portfolio manager at Tribeca Investment Partners.

Being a little bit more isolated in terms of the virus outbreak and the potential economic disruption it could cause, capital inflows have increased, she added.

The S&P/ASX 200 index rose 0.4 per cent, or 25.30 points, to 7,113.50 by 0104 GMT after a 0.6 per cent drop on Wednesday. It was up 0.7 per cent for the week, heading for its third straight weekly gain.

Financial stocks were the biggest gainers with a rise of more than half a percent. All the "Big Four" banks traded higher.

Some economists have pushed back their expectations for a rate cut in the near term after Thursday's strong jobs data, said Ms Liu.

"This is a relief for financials given their margins will be less under pressure this year," she added.

Shares of Commonwealth Bank of Australia and National Australia Bank gained 0.9 per cent and 0.8 per cent, respectively.

Meanwhile, Insurance Australia Group dropped 6.4 per cent to its lowest level in over 11 months after the company trimmed its full-year insurance margins due to hailstorm claims.

Industrial stocks traded higher, with the benchmark's top percentage gainer Downer EDI recovering some of its losses from the previous session as investors bought into the stock on expectation of a potential upside in the longer term.

Healthcare stocks firmed, with heavyweight CSL Ltd gaining 1.5 per cent.

Meanwhile, concerns about the Chinese virus weighed on commodity prices.

The mining sub-index dropped 1.4 per cent in its biggest intraday drop in one month, dragged by lower iron ore and steel prices.

Index heavyweights Rio Tinto and BHP Group fell as much as 3.1 per cent and 1.9 per cent respectively, heading for their worst day in seven weeks.

Lynas Corp, however, rose as much as 3.9 per cent after the rare earths miner said it was on track to get its processing licence renewed by Malaysia in March.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index was little changed at 11,893.94.

Fletcher Building rose 1.4 per cent, while Genesis Energy dropped over 1 per cent.

REUTERS