Australia: Shares give up early gains amid virus fears; energy stocks jump

[BENGALURU] Australian shares gave up early gains to trade flat on Friday, as mounting fears of a deep global economic recession offset a jump in energy stocks on the back of an overnight rally in crude oil futures.

The S&P/ASX 200 index rose as much as 1.8 per cent before trading flat at 5,155.70 by 12.57am GMT (8.57am SGT) after Thursday's 2 per cent drop. The benchmark, however, was on track to post its biggest weekly gain since late 2011, rising more than 6 per cent so far this week.

Oil prices posted their biggest daily gains on record overnight after US President Donald Trump said he expected Saudi Arabia and Russia to announce major oil production cuts as the two countries signalled willingness to make a deal.

"We continue to contend that the Saudi leadership is prepared to... orchestrate a series of deep production cuts, but only if the Russians join the agreement and the United States also scales back output," RBC Capital Markets said in a note.

Australian energy stocks soared on the crude rally, with the energy sub-index rising as much as 10 per cent in its best intraday gain since October 2008.

Santos jumped more than 10 per cent, while Woodside Petroleum soared nearly 16 per cent.

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Miners also rose after Brazil's mining regulator said it would halt operations at 25 mining dams belonging to the world's largest iron ore producer Vale, raising concerns about production.

Heavyweight iron ore miner BHP Group climbed as much as 5 per cent, while rival Rio Tinto jumped 4.3 per cent to its highest in nearly a month. Fortescue Metals Group, the world's fourth-largest iron ore miner, rose 8.6 per cent.

Material stocks were poised for their biggest weekly gain in nearly 10 months.

Meanwhile, fears of a deep global economic recession loomed large, with record jobless claims in the United States for a second straight week escalating concerns over the economic impact of the coronavirus outbreak.

These concerns sent investors to seek shelter in safe-haven assets, pushing bullion prices higher.

Gold stocks jumped as much as 4.5 per cent, with Newcrest Mining adding 1.3 per cent and Evolution Mining rising 2.4 per cent.

Financials fell with the "Big Four" banks trading lower. Analyst said the top four lenders might cut dividends in the coming weeks, tracking similar moves in Europe and New Zealand, to save their capital amid virus woes.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index rose 0.5 per cent or 49.51 points to 9,920.07.

Shares of A2 Milk Co climbed more than 1 per cent, while those of Genesis Energy added 3.5 per cent.

REUTERS