Australian shares tumble as investors withdraw on concerns over global spread of coronavirus

Published On: February 26, 2020Categories: Stocks & Shares2.7 min read

The S&P/ASX 200 fell 2.52% as shares of Australia’s Big Four banks fell

Shares in Australia led losses among major Asia Pacific markets in Wednesday afternoon trade as investors withdrew amid concerns over the coronavirus outbreak beyond China.

In afternoon trade, the S&P/ASX 200 fell 2.52% as the sectors traded lower.

The heavily weighted financial subindex declined more than 2% as shares of Australia’s so-called Big Four banks fell: Australia and New Zealand Banking Group dropped 2.9%, Commonwealth Bank of Australia shed 1.79%, Westpac declined 1.89% and National Australia Bank slipped 2.54%.

The moves came as an earlier data release showed the value of construction work done in the December quarter of 2019 declining. The seasonally adjusted estimate of the value of work done in total construction dropped 3% in the December quarter as compared to the previous period, data from the Australian Bureau of Statistics showed.

The Nikkei 225 in Japan slipped 1.2% in afternoon trade after dropping more than 3% on Tuesday. The Topix index also saw a 1.04% decline. South Korea’s Kospi fell 1.08%.

Hong Kong’s Hang Seng index fell 0.49% by the afternoon. The city unveiled its budget on Wednesday with measures worth 120 billion Hong Kong dollars (approx. $15.4 billion), according to Reuters, as the Hong Kong economy has taken a hit from both the coronavirus outbreak as well as months of anti-government protests that have been at times violent.

Mainland Chinese stocks were mixed. The Shanghai composite recovered from an earlier slip to rise 0.3% while the Shenzhen component slipped 0.98% and the Shenzhen composite declined 0.785%.

Overall, the MSCI Asia ex-Japan index was 0.98% lower.

Meanwhile, January industrial production data for Singapore is expected to be out around 1:00 p.m. HK/SIN on Wednesday.

Investors continue watching for updates on the coronavirus outbreak that is spreading outside of China, with a top U.S. health official warning Tuesday it will likely become a global pandemic.

There has been a recent spike in coronavirus cases outside of China, where the disease was first reported. South Korean authorities have confirmed more than 900 cases within the country’s borders. Meanwhile, Italy has been the worst affected country outside of Asia, with more than 200 reported cases. Iran also confirmed at least 12 deaths.

Overnight on Wall Street, stocks plunged for a second straight session. The Dow Jones Industrial Average plummeted 879.44 points to close at 27,081.36 — posting back-to-back losses of at least 800 points for the first time ever. The S&P 500 slid 3% to end its trading day at 3,128.21, posting back-to-back declines of 3%. The Nasdaq Composite fell 2.8% to close at 8,965.61.

The moves stateside came amid a confluence of factors, such as top Centers for Disease Control and Prevention (CDC) official Dr. Nancy Messonnier telling reporters on a conference call that the American public should prepare in the expectation that the coronavirus situation in the U.S. “could be bad.”

Movements in the bond markets also spooked investors, with the benchmark 10-year Treasury yield hitting an all-time low. The 30-year U.S. bond yield also reached a record low. Bond prices move inversely to yields. The 10-year Treasury yield was last at 1.3671%.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.115 after seeing highs above 99.3 yesterday.

The Japanese yen traded at 110.44 against the dollar after touching an earlier high of 110.12. The Australian dollar changed hands at $0.6596 after seeing levels around $0.662 yesterday.

Oil prices edged higher in the afternoon of Asian trading hours, with international benchmark Brent crude futures up 0.38% to $55.16 per barrel. The U.S. crude futures contract also gained 0.6% to $50.20 per barrel.

About the Author: Jonathan Adams

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