Aussie shares plunge on ‘pandemic’ declaration as investors warn of further heavy falls

The share market has suffered another day of historic losses, spiralling more than 7 per cent lower and haemorrhaging billions of dollars

The Australian share market has suffered another day of historic losses, spiralling more than 7 per cent lower and haemorrhaging billions of dollars after the United States announced a Europe travel ban.

The falls eclipse the pain inflicted on Monday, making it the worst day of losses since the Global Financial Crisis in 2008.

The stock market was off to a rocky start early in the day following the World Health Organisation upgrading the coronavirus to a pandemic.

Soon after, President Donald Trump stepped up to ease economic concerns over the outbreak of the deadly virus but his 30-day ban on travellers from Europe and failure to provide stimulus details sent the local indices into a tailspin.

The ASX plunged 7.4 per cent to 5304.6 by the close on a day 35-year veteran CMC Markets chief strategist Michael McCarthy described as one of the worst he’s ever witnessed.

“The global impulse is really cruelling the local market,” he told news.com.au. “And the steepness of the falls and the speed of the falls suggest there’s more damage to come.”

The local index reached an all-time high of 7289.7 on February 20 but has plummeted more than a quarter in just three weeks, amounting to an astonishing loss of $551 billion.

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Today’s steep falls were inflicted across the board but the energy and banking sectors were particularly smashed, each down 8 per cent.

Major lenders Commonwealth Bank, Westpac, NAB and ANZ were all between 7.8 and 8.8 per cent lower.

Travel companies remain the worst impacted by the virus and the increasingly severe travel restrictions. Both Webjet and Flight Centre fell nearly 20 per cent, while Virgin Australia was down 16.7 per cent.

IG market analyst Kyle Rodda told news.com.au the dramatic drop off in the afternoon reflects a market completely caught off guard by Mr Trump’s announcement.

“This stops the movement of people between the two largest economic blocs in the world and shows the magnitude of how big this crisis is,” he said.

“This is the market now pricing in a bigger than expected economic slowdown and probable global recession.”

Investors are bracing for more pain. Picture: Brendon Thorne/Bloomberg

The market has recorded slight rebounds in recent days but Mr McCarthy said it’s now clear these gains were nothing more than a dead cat bounce.

“As the WHO pointed out, over the last two weeks the number of reported cases has increased 13-fold round the globe and while the virus is spreading like that there’s no sign of a peak in infection rates let alone any end to the outbreak.

“That brings lots of economic uncertainty and we know markets don’t like uncertainty.”

The global health agency made the groundbreaking declaration overnight, escalating the virus to encapsulate the global spread of the disease.

“The WHO has been assessing this outbreak around the clock and we are deeply concerned both by the alarming levels of spread and severity, and by the alarming levels of inaction,” chief Tedros Adhanom Ghebreyesus said at a press conference in Geneva.

"WHO has been assessing this outbreak around the clock and we are deeply concerned both by the alarming levels of spread and severity, and by the alarming levels of inaction"-@DrTedros #COVID19

— World Health Organization (WHO) (@WHO) March 11, 2020

“We have therefore made the assessment that COVID-19 can be characterised as a pandemic.”

The organisation defines pandemic as “an outbreak of a new pathogen that spreads easily from person to person across the globe”.

But Dr Tedros warned the word should not cause “unreasonable fear”, saying more than 90 per cent of the world’s cases were still in just four countries: China, South Korea, Italy and Iran.

Coronavirus has spread around the world. Picture: JHU

STIMULUS PLAN

Prime Minister Scott Morrison announced details of the government’s $15-$20 billion stimulus package, including support for small businesses through tax breaks and subsidies.

About $6.7 billion over four years will be spent on helping small businesses keep running amid the outbreak, in addition to expected cash payments to certain households and a $2.4 billion health package unveiled on Wednesday that includes the creation of 100 fever clinics.