January 17, 2021

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Aussie stock market suffers $200 billion loss in second-worst week ever

2 min read
<p>Travel, education and trade companies are falling dramatically.</p>

The Australian share market has closed down 3.25 per cent for the day, wiping $65 billion and ending the ASX 200's worst five-day stretch of trading since the Global Financial Crisis.

Shortly before 3pm the S&P/ASX 200 Index's total market capitalisation dipped below $2 trillion as the weekly cost of the coronavirus losses surpass $200 billion.

Today's drop was the worst since a 3.8 per cent, 195-point dive on September 29, 2015.

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The Aussie Dollar, which is also heavily reliant on global trade, slipped to a fresh ten-year low of US65.28 cents.

The local currency has not been at that level since March 2009.

AMP Capital Portfolio Manager Dermot Ryan said we are closer to a "market bottom" those most likely to suffer will come from the travel and education sectors.

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"Loss of occupancy in sectors like childcare will be a problem with the new government payment regime where they get nothing for absent days," says Mr Ryan.

"Ultimately in these panics it's the companies that are weak that suffer most – those with too much debt, weak cash flows, tentative business models and overdone valuation will suffer the worst of the share market drops.

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WHY ARE MARKETS FALLING?

* COVID-19 is spreading in South Korea, Iran, Italy and in numerous other countries

* It is difficult to quantify the impact on demand for goods, services and global growth given no one is sure how long it will last and if it can be cured

* There will be disruption to supply chains if countries close borders to contain outbreaks that could see global trade grind to a halt

* Markets at record highs, such as the Australian Securities Exchange, are down in line with other markets, like commodities, that have already dropped

READ MORE: Coronavirus could combine with flu to create mega Australian winter health crisis

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WHAT IS THE IMPACT ON LOCAL SHARES?

* Since late January, a raft of Australian publicly listed companies have issued warnings the coronavirus will hurt their earnings in the short term

* Travel companies, education businesses, food stocks and oil and gas producers are among those whose revenue will be affected in the next few months

Source: 9News https://www.9news.com.au/national/asx-200-coronavirus-aussie-market-suffers-second-worst-week-on-record/1cf6fb83-ff40-4547-b7f5-d1e9c9fab66f

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