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Australia, NZ shares post worst month ever amid recession fears

Published 31/03/2020, 05:39 pm
© Reuters.
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* Financials, energy sector clock in worst month on record

* Healthcare index down 5.9% in March, worst month since Oct. 2018

* NZ benchmark ends higher (Updates to close)

By Nikhil Subba

March 31 (Reuters) - Australian shares closed 2% lower on Tuesday, recording their worst monthly performance ever, as worries of a recession due to coronavirus-led lockdowns outweighed large fiscal support measures announced by the country.

The benchmark S&P/ASX 200 index .AXJO shed more than 21% in March, its biggest monthly drop on record, much higher than the 12.7% it lost during its worst month during the 2008 financial crisis.

On Tuesday, the benchmark settled down 2.02% at 5,076.80 after reversing course from a jump of 3.6% during the session. The index jumped 7% on Monday — its biggest intraday percentage gain on record.

Prime Minister Scott Morrison has pledged A$320 billion ($197.73 billion) in fiscal support to prevent an economic crisis brought on by the coronavirus pandemic. This means Australia might have to borrow more than A$300 billion over the next 15 months — 15% of annual economic output. a result, Australia's coveted "AAA" sovereign rating could be at risk from ballooning debt, with analysts noting that the surge in debt could see the ratings outlook for Australia cut to "negative" from "stable".

Healthcare stocks .AXHJ fell 3.8% to lead the declines on the benchmark. In March, the sub-index dropped 5.9%, its biggest monthly fall since October 2018.

Heavyweight CSL Ltd CSL.AX , closed down 5.1% and Ansell ANN.AX finished 6.3% lower.

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Mining stocks .AXMM ended 4% lower, pressured by BHP Group's BHP.AX 4% drop and Rio Tinto (LON:RIO)'s RIO.AX 3.4% fall. The mining sector's 12.8% drop in March was is its biggest monthly drop since November 2015.

Financial stocks .AXFJ slipped 0.4%, with Commonwealth Bank of Australia CBA.AX ending 3.3% down, the only one among the "Big Four" lenders to close in the negative territory. The heavyweight financial sector fell 27.8% in March, marking its biggest monthly drop ever.

However, energy stocks .AXEJ advanced 0.5%, helped by a recovery in oil prices from 18-year lows after U.S. President Donald Trump and Russian President Vladimir Putin agreed to talks to stabilise energy markets.

Oil Search OSH.AX climbed 2.2%, while Santos STO.AX advanced 1.2%.

The sector shed about 38% in March, its biggest drop ever on a monthly basis.

In New Zealand, the benchmark S&P/NZX 50 index .NZ50 rose 1.4% to end at 9,796.75. On a monthly basis, the index fell 13%, its worst monthly drop ever.

Oceania Healthcare OCA.NZ finished 11.3% higher, while New Zealand Refining Co NZR.NZ gained 13%.

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