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The Australian share market finished session lower on Monday, 24 February 2020, as the spread of the COVID-19 epidemic from China to neighboring countries amplified worries about the impact on supply chains and global economic growth. At closing bell, the benchmark S&P/ASX200 index declined 160.69 points, or 2.25%, to 6,978.28, while the broader All Ordinaries stumbled 165.04 points, or 2.28%, to 7,065.41.
Sydney market was pressured by selling of stocks sensitive to economic prospects after spread of the virus inside and outside of China. Developments surrounding the new coronavirus, known as COVID-19, will continue to be monitored by investors as they attempt to ascertain the potential economic impact of the disease. Economists at Standard Chartered Bank on Friday estimated that COVID-19 epidemic could affect 30% of China's imports and 10% of its exports, prompting them to lower their gross domestic product forecast for China this year to 5.5% from 5.8%.
Italy, South Korea and Iran posted sharp rises in infections over the weekend. South Korea now has more than 760 cases, Italy more than 150 and Iran 43 cases.
Meanwhile, the World Health Organization said Friday that there are 76,767 confirmed cases of the illness and 2,247 deaths, marking another day in which the number of new cases world-wide has slowed.
IHS Markit said business in the U.S. contracted in February for the first time in four years owing to disruptions caused by the coronavirus and growing angst over the outcome of the 2020 presidential election. The forecasting firm said its activity indexes for both manufacturers and service-oriented firms declined this month. And the service sector index turned negative for the first time since 2015. In a big surprise, the index covering the large service side of the economy sank 4 points to 49.4, IHS Markit said Friday. A reading of less than 50 indicates a contraction in activity.
On the ASX the energy, information technology, industrial, and consumer discretionary sectors all fell more than -3%. The best performing sector was communications with a fall of -1.4%, thanks to a strong performance by New Zealand's Chorus Ltd, up 5.6% after upgrading full year guidance.
CURRENCY NEWS: The Australian dollar slid against greenback, as the number of coronavirus infections rose sharply in South Korea, Italy and Iran, sending investors scurrying to safe havens such as gold. The Australian dollar was at $0.6607 after declining from levels above $0.67 last week.
In commodities, oil prices slid as investors fretted about crude demand being pinched by the effects of the outbreak, while leading producers appeared to be in no rush to curb output. Brent crude slumped 3% to $56.72 a barrel while US crude dropped 2.7% to $51.9 a barrel.
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