Australia: Shares post biggest weekly drop in seven weeks

[BENGALURU] Australian shares wrapped up their worst week in seven, with the benchmark index sliding nearly 2 per cent on Friday on fears of a second wave of Covid-19 infections and a gloomy economic outlook from the US Federal Reserve.

The three major US stock indexes fell more than 5 per cent on Thursday, posting their worst day since mid-March, after a leading health expert warned the coronavirus death toll could touch 200,000 by September.

The S&P/ASX 200 index fell 1.9 per cent to 5,847.8, marking its second straight session of losses. For the week, it dropped 2.5 per cent after six straight weeks of gains.

"We are probably in what I would call a circular bear market now," said Brad Smoling, managing director at Smoling Stockbroking.

"The euphoria of all the stimulus and free money is starting to wane and investors will start to take notice of earnings and balance sheets of businesses that are going to reopen."

In a bid to revive the ailing Australian economy, the federal government is pushing state and territory leaders to reopen internal borders and drawing up plans to allow international students to return as the country's Covid-19 cases fall.

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Financials fell 3.8 per cent for the week after two weeks of gains.

Westpac Banking, Australia's No 2 lender, dropped 3.3 per cent on Friday after the financial crime regulator said it may add additional breaches of anti-money laundering laws to its lawsuit against the lender.

Energy stocks slumped 4 per cent as oil prices tumbled, with sector heavyweights Woodside Petroleum and Santos losing 5.3 per cent and 3.6 per cent, respectively.

New Zealand's benchmark S&P/NZX 50 index fell 2.2 per cent to 10,905.94, posting a weekly drop of 2.4 per cent.

Local shares of Westpac dropped 4.1 per cent, while those of Australia and New Zealand Banking Group eased 3.5 per cent.

REUTERS