Australia Stocks tumble on lingering coronavirus concern, trade war woes

The Australian share market finished session steep lower on Thursday, 25 June 2020, on tracking negative lead from Wall Street overnight after the US signalled possible new tariffs on European goods and the International Monetary Fund slashed its global economic forecasts again on Wednesday. Meanwhile, fears of a second wave of coronavirus infections at home and around the world also weighed down sentiments.

At closing bell, the benchmark S&P/ASX200 index tumbled 148.07 points, or 2.48%, to 5,817.68. The broader All Ordinaries tanked 153.57 points, or 2.53%, to 5,927.98.

Investors risk sentiments dampened as a record daily increase in coronavirus infections at home and in multiple states in the United States and a resurgence of cases in other major economies sparked concerns over the prospects for a global economic recovery from the pandemic.

 

A global tally of COVID-19 infections crossed 9.33 million, with Australia recording its biggest one-day rise in COVID-19 cases in two months. The United States posted its second-largest increase in cases since the crisis began.

Sentiment was soured further after reports that the administration of President Donald Trump is considering new tariffs on European goods. The U.S. Trade Representative said it was weighing new tariffs on US$3.1 billion (RM13.2 billion) in European goods amid a dispute over subsidies to planemaker Airbus, ratcheting up a fresh trade war tensions with the European Union. The Trump administration also has been threatening to reimposing tariffs on imports of aluminum from Canada on July 1 as the new USMCA, or the United States Mexico Canada Agreement, which replaced the North American Free Trade Agreement, is set to take effect.

Meanwhile, updated International Monetary Fund (IMF) economic forecasts also hit investor sentiment. The IMF cut its economic forecast for 2020, saying that the coronavirus pandemic has caused an unprecedented decline in global activity. The IMF dropped its global economic growth expectations for this year to negative 4.9%. That's almost two percentage points lower than three months ago. In 2021, global growth is expected to rebound to a 5.4% growth rate, still leaving the level of GDP about 6.5 percentage points lower than the pre-COVID-19 projections in January.

Lithium explorer Orocobre Ltd fell as much as 8% after warning of a drop in June-quarter lithium carbonate sales from its flagship Olaroz mine.

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