Billions wiped off ASX in just 15 minutes
A tsunami of red ink has flooded the Australian share market as panicked investors flee, wiping more than $120 billion from its value.
In the first 15 minutes of trade today, the benchmark ASX 200 index tumbled 6.6 per cent - bigger than any fall so far in the rout triggered by the coronavirus outbreak.
It comes amid growing fears that the spread of the virus will deliver a painful blow to the global economy, sending it spiralling into recession.
The slump follows dramatic falls in oil prices at the weekend as expectations of recession grow.
Shares in Woodside Petroleum, Australia's biggest pureplay oil and gas producer, plunged more than 18 per cent in the early trade, while Origin Energy was down about 12 per cent.
Mining titan BHP - Australia's biggest company - tumbled 8 per cent, wiping $12 billion from its value.
The selling spree that buffeted the big four banks the past two weeks has also continued.
Shares in Westpac, ANZ and the Commonwealth Bank are all down 3 per cent or more in early trade, while National Australia Bank is close behind, sliding 2.7 per cent.
Over the past two weeks, $73.4 billion was stripped from the value of the four banks as their shares slumped on average by 17.9 per cent.
It comes as the Morrison government prepares to dig deep into its dwindling budget surplus to protect the economy from the impact of the coronavirus.
The government is keeping the make-up of its promised $10b support package close to its chest.
Michael Croker, tax leader at Chartered Accountants Australia and New Zealand, expects it will include direct subsidies for impacted business, as well as some deferred taxes.
"We're hoping for an investment allowance which will encourage not just small business, but big businesses which have got deeper pockets to go out there and spend and hopeful spend that money on small business suppliers," he told Sky News.
The Australian Treasury estimates the virus will cut at least 0.5 percentage points from growth in the March quarter, on top of the 0.2 percentage drag from this summer's devastating bushfires.
AMP capital chief economist Shane Oliver is forecasting an economic contraction in both the March and June quarters, which would mark Australia's first recession since the early 1990s.
While he expects an initial stimulus of $3 to $5 billion, he believes there will be a need to increase it to around $20 billion by the time of the May budget to include a boost for households.
"So for now much of the pressure remains on the (Reserve Bank)," Dr Oliver said, who expects another interest rate cut to a cash rate of just 0.25 per cent next month.
With the virus spreading rapidly, its taking a toll on international travel.
Flight Centre has asked staff to cut back their hours or take unpaid leave.
"Staff can work a four-day week rather than five days with their salary reflective of this change," said an email sent to staff and seen by The Australian.
"All staff have been offered the opportunity to reduce their FTE (full-time equivalent) by one day per week or fortnight."
Meanwhile, Virgin Australia chief executive Paul Scurrah is urging the federal government to lower airport charges saying it would led to "less pressure to cancel flights".
The company estimates the coronavirus will slash earnings by up to $75 million in the six months ending June 30.
- with AAP