Australia Stocks tumble 2.8%

The Australian share market finished session steep lower on Friday, 06 March 2020, as the market mood was dampened by tracking a sell-off on Wall Street overnight amid deepening worries over the economic damage globally from the coronavirus that is spreading rapidly. At closing bell, the benchmark S&P/ASX200 index declined 179.52 points, or 2.81%, to 6,216.21, while the broader All Ordinaries dropped 184.93 points, or 2.86%, to 6,287.51.

Financial markets have been on a roller coaster as investors grapple with the potential economic damage caused by fractured supply chains, travel bans and the disruption of daily life. The viral outbreak that was first identified in Wuhan, China, in December has sickened nearly 98,000 people and claimed at least 3,300 lives so far, spreading around the globe.

The infectious disease is an exogenous factor that economists and investors are finding difficult to model. There is little clarity about how long it will take governments and health officials to contain the virus, leading to a gloomy prognosis for global economic growth.

In China, where the number of new infections has been slowing drastically, stocks trading in Shanghai have rallied nearly 12% since hitting a bottom on Feb. 3. Factories there are gradually reopening, and a return to a sense of normal life may even be on the horizon following swift and severe actions by the government to corral the virus. But elsewhere in the world, the mood is darker. There are about 17 times as many new infections outside China as in it, according to the World Health Organization.

The escalating virus epidemic has stoked concerns of global economic impact, with the S&P Global Ratings forecasting Australian growth to slow sharply to 1.2% in 2020. The agency also expects the epidemic to knock $211 billion off the combined economies of Asia-Pacific.

Banks have been particularly hard hit and were the main drag, wiping ~50 points from the ASX 200 index. The National Australia Bank and Westpac both closed lower by 5.5% and 4% respectively to A$22.00 and A$21.35. ANZ shed 4.7% to A$22.14. The Commonwealth Bank slumped 3.7% to A$73.93. Bendigo and Adelaide Bank shares were smashed after trading ex-dividend, sliding 8.2% to A$7.78.

Retailers were also hit hard by worse than expected retail sales numbers for January. Flight Centre and G8 Education both fell 7% to A$26.50 and A$1.325 respectively. Shares in department store operator Myer collapsed, falling 16.7% to A$0.275 to finish at the lowest level on record.

Industrials and information technology also slid over 3%, the former weighed down by Qantas which nosedived 8.1% to A$4.66 with the latter dragged lower by Xero and Afterpay which shed 5.5% and 4.2% respectively to A$75.17 and A$32.94. Department store Myer (MYR) fell 16.7% to an all-time low as the retailer was also hit by a number of analysts cutting their price expectations for its stock.

CURRENCY: The Aussie dollar remains above 66.1 US cents despite the weaker retail spending data.

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