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.