The Australian share market has fallen as much as 2 per cent in early trade after US President Donald Trump failed to give more details of a planned stimulus package to combat the economic damage from the coronavirus.
- Australian markets were buoyed by Mr Trump’s promises, but quickly slid again when the US President failed to provide details of the proposed stimulus
- Wall Street rose nearly 5 per cent to recover from the brink of a bear market
- The previous day saw US indexes suffer their worst session since 2008
The local market rose initially but quickly fell into the red as US stock market futures fell because Mr Trump did not outline his plans to ask the US Congress for another economic boost, as he promised yesterday.
The market surged 3 per cent on Tuesday on the US stimulus pledge, but by 11:30am AEDT today the ASX 200 index was down 1.8 per cent or 104 points to 5,835 with consumer and telecommunication stocks leading the falls.
The All Ordinaries index has dropped by 79 points to 5,917. All sectors are in the red.
Today’s falls deepened after the Federal Government announced it would extend its travel bans to Italy.
Webjet shares fell nearly 3 per cent after the company abandoned its annual profit forecast because of the coronavirus.
Qantas shares have lost 9.7 per cent or $0.43 to $4.02. BHP is down 0.4 per cent to $29.13 after the High Court dismissed its appeal against a tax ruling.
Consumer confidence has also taken a hit from the coronavirus outbreak.
The Westpac-Melbourne Institute Index of Consumer Sentiment fell 3.8 per cent to 91.9 in March from 95.5 last month.
Westpac predicted the Australian economy would fall into recession for the first half of this year and thought the Reserve Bank would cut interest rates again next month, after a 0.25 per cent reduction last week to a record low of 0.5 per cent in an attempt to boost weak economic growth.
Westpac chief economist Bill Evans said consumers were worried about the Australian economy.
“The worsening coronavirus outbreak and associated rout in financial markets have had a major impact on sentiment this month,” Mr Evans said.
“The index has hit a five-year low. In fact it is the second lowest level of the index since the global financial crisis, when the index bottomed out at 79.”
Wall Street boosted by Trump’s promises
Meanwhile, Wall Street pulled back from the brink of a bear market as Mr Trump’s promise of “major steps” calmed investors.
But the Australian dollar plunged by 1.5 per cent to 64.9 US cents as the greenback surged.
Mr Trump said the fiscal stimulus package would include a payroll tax cut and other measures to help companies.
In addition, US private health insurers agreed to extend COVID-19 treatment cover in all of their plans and waive co-payment fees for testing.
All the major US indexes jumped in another volatile showing, a day after suffering their worst session since the global financial crisis in 2008.
The Dow Jones index increased nearly 5 per cent, or 1,167 points, to 25,018, recouping about two thirds of Monday’s losses.
The S&P 500 rose 136 points or 4.9 per cent to 2,882.
The Nasdaq jumped 5 per cent to 8,344.
In futures’ trade here, the ASX SPI 200 index was up by two thirds of a per cent to 5,999.
The Australian share market made gains of about 3 per cent yesterday on the news of the US stimulus plans, having lost almost $140 billion in Monday’s trade.
But European markets fell again after a short-lived early recovery.
The FTSE 100 in London lost one tenth of a per cent to 5,960.
Italian stocks dropped to a three-year low.
West Texas Crude put on 12 per cent to $US34.86.
Prices crashed after a price war broke out between Saudi Arabia and Russia over the weekend.
Spot gold fell nearly 2 per cent to $US1648 an ounce as investors looked for riskier assets.
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