Coronavirus Fears Wipe $40 Billion Off The ASX

By Glenn Dyer | More Articles by Glenn Dyer

Markets sold off yesterday for a second day after the death toll from China’s coronavirus jumped to more than 100 with over 3,000 cases reported worldwide and hundreds more suspected.

The ASX slumped sharply – as expected – with an estimated $40 billion wiped off the value of the ASX 200. Stocks led by travel, oil and other resource groups slumped but gold miners rose on the run-up in the price of the metal.

After seven sessions closing above 7,000 points, the ASX 200 shed 96 points to close 1.4% lower at 6,994.5. The Aussie dollar remained well under 68 US cents at around 67.60 cents.

Australian 10 year bond yields tumbled sharply to well under 1% for the first time in three months. They closed at 0.95%, a mark of the safe-haven approach of some investors.

Every sector except healthcare closed lower and just 35 companies of the top 200 ended the day higher or flat.

Energy dropped 2.9%, consumer discretionary fell 2.5%, and materials dropped by 2.3%. Financials fell by 1.2%.

Gold miners also did with Saracen Minerals up 3.5%, Northern Star up 3%, and Evolution Mining up 2.4%.

Meanwhile, travel-related stocks took a hammering on fears the virus and travel restrictions will hit business, especially from China (which it will).

Webjet shed nearly 14% to close at $12.37, the lowest price since December 12, after a Morgan Stanley analyst downgrade, while Corporate Travel dropped 7%, Helloworld dropped 4.8% and Flight Centre fell just over 4%.

Oil Search fell 7.5% mostly because of a weak outlook and a lack of news on talks with the PNG government. Woodside and Santos shares fell by just over 2% each.

Fortescue Metals shares dropped 7.3% to $11.57 on fears the virus would hit demand for steel and therefore iron ore.

But Fortescue shares had jumped 16% so far in 2020 which was well ahead of the market, so it was vulnerable to a pullback.

That saw Fortescue’s market capitalisation dropped by $2.8 billion in one day.

Shares in BHP and Rio Tinto fell by just over 3% yesterday – smaller than Fortescue’s slump but a reminder of the fears about the impact of the virus on the Chinese economy and commodity prices.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →