Australian shares suffer $210 billion wipe-out as Wall St plunges amid coronavirus-fuelled downturn
The Australian share market has faced one of the worst weeks since the GFC, wiping $209.8 billion from the boards.
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The Australian share market has suffered its worst day in over four years, closing the day at a six-month low amid a growing panic over the coronavirus outbreak.
A whopping $209.8 billion was wiped from the Australian share market in another dramatic sell-off.
The S&P/ASX200 index finished down 216.7 points, or 3.25 per cent, at 6,441.2, while the broader All Ordinaries index plummeted 225.9 points, or 3.35 per cent, to 6,511.5 points.
For the week the benchmark S&P/ASX200 index lost 697.8 points, or 9.77 per cent, for its second-worst losses ever, exceeded only by a 15.65 per cent dive in October 2008 during the global financial crisis.
Since hitting an all-time high of 7,197.2 on Thursday, February 20, it has declined for six straight days, losing 756 points, or 10.5 per cent of its value – taking it into correction territory.
Today’s drop was the worst since a 3.8 per cent, 195-point dive on September 29, 2015.
The Aussie dollar meanwhile was buying 65.20 US cents, its lowest level since February 2009, down from 65.50 US cents at the market close on Thursday.
On Wall St, the Dow Jones Industrial Average took its biggest tumble in two years.
The slump in global markets overnight came as the number of coronavirus cases declared outside China jumped significantly.
Almost 1200 points were wiped from the Dow Jones Industrial Average, while America’s benchmark S&P 500 index has now plunged 12 per cent from the all-time high it set just a week ago.
The US market is now headed for its worst week since October 2008, at the depths of the global financial crisis.
A ballooning number of companies in Australia and overseas are warning the COVID-19 outbreak will hurt their profits.
Overnight, Microsoft warned that the outbreak had interrupted its supply lines, following a similar warning last week from Apple.
Shares in shoemaker Crocs also fell sharply after the US company said its results would be hurt.
The virus has now infected more than 82,000 people globally and is worrying governments with its rapid spread beyond the epicentre of China.
Japan has announced it will close schools nationwide to help control the spread of the virus.
Investment bank Goldman Sachs on Thursday said earnings for companies in the S&P 500 index might not grow at all this year, after predicting earlier that they would grow 5.5 per cent.
Earlier this week, Moody’s Analytics chief economist Mark Zandi said a “global recession is likely if COVID-19 becomes a pandemic, and the odds of that are uncomfortably high and rising with infections surging in Italy and Korea”.
On our market this morning, resources and financial stocks were among the big losers.
BHP shares were down 4.1 per cent in early trade, AMP had tumbled 4.7 per cent and National Australia Bank suffered a 3.8 per cent drop.
‘REDUCED FORECASTS’
Maris Ogg of Tower Bridge Advisors said there were still too many unknowns about the scale of coronavirus’ global outbreak and that “we’re not going to know the answer for a while, probably at least two to four weeks”.
The market’s losses were exacerbated in the US by the lofty valuations that lifted indices to a series of records only weeks ago.
“It’s understandable that not only do you have something to worry about, which we haven’t had for a while, but we’re also due for a correction,” Ogg said.
The Dow was a sea of red, with 3M the only gainer due to robust demand for face masks to guard against the virus.
Other large companies, including Apple, Boeing, Microsoft and Procter & Gamble lost more than five per cent.
Markets have been rattled by the prospect that lockdown measures such as those employed in China will become more widespread, denting global growth and producing a “nesting” impulse in the consumer-driven US economy, especially coming at a time when many economies already are fragile.
Goldman Sachs was the latest to issue a warning on Thursday when it slashed its 2020 forecast for US earnings, estimating that it now expects flat earnings in 2020 and lower growth in 2021.
“Our reduced forecasts reflect the severe decline in Chinese economic activity in (the first quarter), lower end-demand for US exporters, supply chain disruption, a slowdown in US economic activity, and elevated uncertainty,” Goldman said.
“Previous crisis playbooks have all revolved around buying the dip in equities, so I wonder just how much further the fire sale will go before the market at least starts to scale in again,” analyst Stephen Innes of AxiCorp said in a report.
“But based on last night’s price action, it does appear that any bounce in stocks is likely to be short-lived. And eventually, the markets could fall deeper as investors start to think what’s the point of trying to pick the bottom in the short term.”
US President Donald Trump announced late on Wednesday that the US was stepping up its efforts to combat the virus outbreak that began in China, as the number of cases surpassed 81,000.
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He said he was open to spending “whatever’s appropriate” to fight the virus, after the Senate Democratic Leader Chuck Schumer of New York suggested $US8.5 billion ($A16.7 billion) instead of the requested $US2.5 billion ($A5 billion).
He put Vice President Mike Pence in charge of the response to the virus outbreak.
Mr Trump said he didn’t believe a pandemic was inevitable, though health officials standing beside him warned more infections are coming. And shortly after Mr Trump spoke, the government announced that another person in the US was infected – someone in California who appears not to have the usual risk factors of having travelled overseas or being exposed to another patient.
Originally published as Australian shares suffer $210 billion wipe-out as Wall St plunges amid coronavirus-fuelled downturn