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29 Mar 2020 15:46
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  •   Home > News > International

    Australian share market slumps ahead of global rescue plan to fight coronavirus

    Local stocks end sharply lower, while US stocks record their third rise in a row as investors await the approval of a stimulus package worth more than $3 trillion.


    The Australian share market closed sharply lower after giving up early gains and despite Wall Street rising, as more stimulus was promised by world leaders to head off a coronavirus-induced recession.

    Investors are also awaiting a $US2 trillion ($3.3 trillion) economic rescue plan to be approved by the US Congress.

    Australian shares jumped in early trade but staged a sharp reversal, which saw the ASX 200 index close 5.3 per cent lower at 4,842 points.

    The All Ordinaries index finished the session 5.1 per cent weaker at 4,874.

    All sectors ended in the red, led by financials, health care and energy stocks, including Santos (-10pc) and ANZ (-7.4pc).

    It comes as the leaders of the world's biggest economies pledged to do whatever necessary to fight coronavirus.

    On a video conference call overnight, the G20 promised to inject $US5 trillion ($8.2 trillion) into the world's economy.

    "The G20 is committed to do whatever it takes to overcome the pandemic, along with the World Health Organisation, International Monetary Fund, World Bank Group, United Nations, and other international organisations," the group said in a statement.

    "We are determined to spare no effort, both individually and collectively."

    Kathmandu stands down thousands of workers

    Adventure clothing and equipment chain Kathmandu is the latest retailer to stand down thousands of workers because of the coronavirus pandemic.

    The retailer said all of its Australian stores and surf wear chain Rip Curl would shut by the close of business today.

    Kathmandu has about 1,300 employees in Australia and 165 stores across Australia and New Zealand.

    Most staff will be stood down without pay for four weeks and senior executives will see their salaries cut by 20 per cent.

    Kathmandu said the closures were to protect the health and safety of staff and the community, in line with new social-distancing measures imposed by the Federal Government.

    Online retailing will continue and head office staff will work from home.

    Kathmandu has already shuttered its stores in New Zealand, Brazil, North America and Europe.

    Other companies have made similar moves, including homewares chain Adairs, which will stand down staff as it shuts six stores, and Retail Food Group, which is reducing working hours and standing down some employees.

    Wall Street rises ahead of stimulus, Dow Jones up 6 per cent

    Overnight US stocks recorded their third rise in a row as investors awaited the approval of the more-than $3 trillion stimulus package.

    The Dow Jones Industrial Average rallied 1,352 points, or 6.4 per cent to 22,552 at the close.

    The index has increased by 21 per cent since Monday, putting it technically in a bull market, where stocks are rising.

    However, wild swings and huge volatility are hallmarks of a bear market, where investors are fearful and stocks continue to fall.

    The S&P 500 index has now recorded its biggest three-day percentage gain since 1933.

    It gained 155 points, or 6.2 per cent to 2,630. The Nasdaq Composite added 413 points or 5.6 per cent to 7,798.

    European stocks also increased, with London's FTSE 100 index putting on 128 points or 2.2 per cent to 5,816.

    America may be in recession

    As the G20 pledged $US5 trillion ($8.2 trillion) to help fight the pandemic, the head of the US central bank conceded the North American economy may well be in recession.

    Federal Reserve chairman Jerome Powell said progress in controlling the spread of the virus would dictate when the economy could fully reopen.

    His comments are an unusual acknowledgement that the economy may be shrinking before the official figures confirm it.

    More than 3 million people filed for unemployment benefits in the US last week.

    That is the most on record as strict measures to contain the coronavirus saw a wave of layoffs in North America.

    The news prompted a fall in the greenback.

    © 2020 ABC Australian Broadcasting Corporation. All rights reserved


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