Australia Market closes down 7.4% on virus fears

The Australian share market finished session at fresh 14-month low on Thursday, 12 March 2020, with investors sharply growing risk-averse in the wake of U.S. stocks plunged overnight after US President Donald Trump announced a ban on travel from Europe and the World Health Organization declared the coronavirus outbreak a global pandemic. At closing bell, the benchmark S&P/ASX200 index stumbled 421.24 points, or 7.36%, to 5,304.63, the lowest close since 8 January, 2019. The broader All Ordinaries dropped 418.41 points, or 7.23%, to 5,370.92. The index is now firmly in "bear" territory, indicative of a drawn-out period of negative investor sentiment, having declined 26.3% since a Feb. 20 peak.

Investors moved to dump stocks from the outset, in view of the Dow Jones industrial average and other key U.S. market indexes continuing to spiral down overnight with the coronavirus scare raised further by the WHO chief's characterization of the global virus outbreak as a pandemic.

 

The risk-off mood accelerated its downswing after Trump announced a 30-day ban on all travel from Europe excluding Britain swelled concerns that business activities between the United States and Europe will be badly affected.

Fears that the travel ban would slow global growth added to the worries of whether the stimulus measures being announced globally would be effective in limiting the outbreak's impact, prompting investors to cut exposure to riskier assets.

All but two of the top 200 stocks on the ASX closed in negative territory today with the construction giant Cimic Group (CIM) the most improved by 2.17% and healthcare imaging company, Pro Medicus (PME) improved by 1.29%, while the broader healthcare sector experienced the heaviest falls. Biotech firm, CSL Ltd (CSL) lost 7.6% while Sonic Healthcare (SHL) closed 7.5% lower.

The heavyweight Australian financials declined, with all the Big Four banks trading lower in the range of 7.8% to 8.8%. Commonwealth Bank of Australia, the country's top lender, dropped 7.9%, while second-largest bank Westpac Banking Corp fell 8.8%.

The heavyweight mining sector declined 7, with BHP Group and Rio Tinto losing 7.7% and 6.4%, respectively.

Energy stocks settled lower, with Woodside Petroleum and Santos giving up 9.1% and 7.9%, respectively.

Travel stocks also slumped again following further travel bans being announced. Qantas (QAN) tumbled 10% while travel agent businesses such as Webjet (WEB) and Flight Centre (FLT) dropped 19.6% and 18.2% respectively. Virgin Australia (VAH) fell 16%.

Again gold did not manage to remain stable as the safe haven has done in the past. Gold miners suffered large declines. Newcrest Mining (NCM) shed 8.7% with Northern Star (NST) falling by 7%.

CURRENCY: The Aussie dollar changed hands at $0.6442 after seeing highs above $0.657 earlier this week.

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