Australia: Shares sink most since 1987 as Fed fails to allay virus fears

[BENGALURU] Australia's benchmark stock index dove the most since 1987 on Monday as investors worried that a raft of stimulus measures, including the US Federal Reserve's policy actions, would fall short in stemming the economic impact of the novel coronavirus.

The benchmark S&P/ASX 200 index sunk 9.7 per cent or 537 points to 5,002.00 at the close of trade, as the sell-off worsened in the final minutes of trading.

"A mixture of the Fed's emergency move once again triggering fresh concerns and the fear that the central banks' support may not be enough to cushion the impact had the risk-off mood raging across the market at the start of the week," said Pan Jingyi, market strategist at IG.

The US Federal Reserve slashed interest rates by 100 basis points to near zero overnight and promised to expand its balance sheet by at least US$700 billion in coming weeks.

The move, however, failed to soothe investors panicking over the fast-spreading novel coronavirus, with just three of the benchmark's 200 stocks ending in positive territory.

Financial stocks, which constitute about a third of the main index, plunged 11.1 per cent to their lowest since 2004 and were the top drags on the benchmark.

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Each of the country's "Big Four" banks ended more than 10 per cent lower as the prospect of a further cut in interest rates raised margin concerns.

"Another rate cut and QE (quantitative easing) seem inevitable given the impact the extended measures to manage the spread of the coronavirus will have on the Australian economy. These measures could be announced as soon as this Thursday," analysts at ANZ said in a note.

Piling on the downward pressure, data from China, Australia's largest trade partner, showed that factory production and trade plunged in the first two months of the year, underlining the impact of the outbreak on the world's second-largest economy.

The mining sector tumbled 7.3 per cent, as gold stocks faltered.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index ended 3.6 per cent lower at 9,476.94. The decline came even as the country's central bank slashed interest rates to a record low in an emergency move. REUTERS