Australian shares have lost nearly $100 billion in a day of volatile trade after the country shut down parts of its economy and more states shut their borders.
- The ASX 200 lost further value, putting it back to where it was in late November 2012
- The Australian dollar is trading at a near 17-year low
- Global rating agency Standard & Poor’s predicts Australia’s economy will expand by just 0.4 per cent in 2020
Investors were also unnerved by the failure of the US Congress to pass the latest coronavirus stimulus bill, which saw US stock futures plunge 5 per cent at the open, the biggest permissible fall.
The ASX 200 index came off earlier lows to be down by 5.6 per cent or 271 points to 4,546 at the close, with most sectors in the red led by banks and consumer stocks.
The benchmark index is back to where it was in late November 2012.
The All Ordinaries index slumped 6 per cent to 4,564.
The Australian dollar is trading at a near 17-year low against the greenback of around 57.63 US cents.
Another fall in oil prices saw the ASX 200 energy index lose as much as 9 per cent during the session, to the lowest since early 2004, as more companies cut their spending and delayed projects.
It comes amid a slump in demand for fuel due to coronavirus, and as governments globally closed borders and shutdown their economies.
The Nikkei 225 index in Japan has gained 2 per cent after the Bank of Japan said it would inject an extra 800 billion yen ($12.7 billion) into the financial system of the world’s third-largest economy.
In China, the Shanghai Composite and the Hang Seng index in Hong Kong were both in the red in afternoon trade.
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Swimwear company Tigerlily goes into administration
Fashion and swimwear brand Tigerlily became the latest retailer to go into voluntary administration.
Administrator KordaMentha said the decision to go into administration was made after considering the impact of the coronavirus.
Tigerlily employs 200 people and some shops will stay open as the administrators look for a buyer.
The firm was founded by former model and businesswoman Jodhi Meares, a former wife of billionaire James Packer.
The first meeting of creditors will be on April 1.
Reserve Bank plans further bond purchases
The Reserve Bank said it planned to buy another $4 billion in government bonds.
That follows a $5 billion purchase of bonds on Friday in its biggest intervention in Australia’s financial system in history.
The banking regulator, the Australian Prudential Regulation Authority, will soon announce plans to reduce the regulatory burden faced by financial institutions in the wake of the coronavirus.
The news comes a little over a year since the final report of the banking royal commission was released, which clamped down on bad behaviour by financial institutions.
APRA said lenders needed to put aside more money to cover losses caused by allowing customers to defer loan repayments.
The Council for Financial Regulators said it had discussed the need for continued “close engagement” and contingency plans with international regulators.
CMC Markets chief markets strategist for Asia Pacific, Michael McCarthy, said investors were increasingly pessimistic about the economic outlook and were expecting a recession globally and in Australia, especially as the US Senate failed to advance a coronavirus stimulus bill.
“The lack of political will in a crisis is really disappointing investors,” he said.
However, negotiations are ongoing, and US President Donald Trump said Congress was close to reaching an agreement.
On the local market, banks and industrial stocks led the falls.
The big banks plunged to multi-year lows, with National Australia Bank back at levels not seen since 1996 at one point this morning.
Buy now, pay later firm Afterpay lost nearly one third of its value, down $3.50 to $8.90.
Financial company Challenger dropped by more than one fifth to $2.97 after the Federal Government said people in financial difficulty because of the coronavirus could access their superannuation early.
And retail firms like Premier Investments also took a hit; its shares lost one quarter of their value to $8.95.
Flight Centre brought forward plans to close 100 underperforming stores and its senior executives will take a 50 per cent pay cut.
US stocks futures fell by nearly 4 per cent in opening trade in Asia, suggesting another fall on Wall Street tonight.
In New Zealand, the benchmark NZ50 index lost 7.6 per cent to 8,498 after the country’s government announced a shutdown to try and stop the spread of the coronavirus.
Global credit-ratings agency Standard & Poor’s (S&P) estimated total and permanent losses in Asia because of the coronavirus stood at $US620 billion ($1.08 trillion) for governments, companies, banks and households.
Last week it said the global economy was already in recession.
S&P predicted Australia’s economy would expand by just 0.4 per cent in 2020 after growth of 2.2 per cent last year seasonally adjusted according to the Bureau of Statistics.
It said China’s growth rate could halve this year to 2.9 per cent.
The agency forecasted the Hong Kong, Singaporean, South Korean and Japanese economies would go backwards in 2020.
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