ASX closes 5.6% lower, hits 8-year low

ASX set to plunge at open. Source: Getty

UPDATE AT CLOSE: The ASX200 has closed 5.62 per cent lower, recouping some of its losses after dropping more than 8 per cent open.

This brings the stock market to a nearly eight-year low as borders close and businesses shut in efforts to slow the spread of the coronavirus pandemic.

The broader All Ordinaries plunged 290.2 points, or 5.98 per cent as some businesses and state and territory borders closed with stricter measures to control the pandemic.

One Australian dollar was buying 57.55 US cents, down from 58.82 on Friday when the share market closed.

UPDATE 12PM: The ASX200 tanked 367.2 points, or 7.62 per cent, to 4449.4 at midday AEDT on Monday in panic selling across the board on a stream of negative Covid-19 news and profit warnings.

The broader All Ordinaries index similarly plunged 7.8 per cent as some businesses and state and territory borders closed with stricter measures to control the pandemic.

By noon AEDT consumer discretionary and financial indices had dived more than 10 per cent with the property trust index not far behind with a 9.35 per cent fall.

Virgin Australia revealed it would cut more domestic flights and regional airline Rex will only operate passenger services in Queensland, with their share sinking 0.1 per cent and 28.57 per cent respectively.

Flight Centre was in a trading halt.

Recession imminent

While the government introduced a second stimulus package to the tune of $66 billion, analysts say the measures won’t be enough to prevent a recession.

However analysts say the measures are not enough to prevent a recession.

"Australia's relatively strong fiscal position points to a limited impact of the economic downturn and the fiscal stimulus on the sovereign's fiscal strength,” Martin Petch, vice president of Moody’s Investors Service said.

ANZ said the measures would make a dent, but will not offset the economic consequences of the pandemic.

"We maintain expectations of a mid-2020 recession," it said in a note.

"The risk is that it could be deeper and longer than currently anticipated as shutdowns and border closures push economic growth down another notch."

What happened this morning?

The ASX has dipped more than 8 per cent at open, after the Prime Minister announced strict lockdown measures on Sunday.

The benchmark S&P/ASX200 dived 398.1 points, or 8.27 per cent, to 4418.5 at 1015 AEDT on Monday.

The broader All Ordinaries index also slid 8.22 per cent at 10.19am AEDT.

Markets have fallen off the back of the government’s lockdown measures, which would see all non-essential services shut down as coronavirus cases continue to rise rapidly.

Pubs, clubs, gyms and cinemas and places of worship would be shut down from 12.00pm AEDT today, while restaurants and cafés will need to pivot to takeaway only.

The drops come despite the government announcing a $66 billion ‘survival package’, which would see small businesses receive a full rebate on income tax withholdings, worth up to $100,000, and the JobSeeker Payment, formerly Newstart, effectively doubled.

What happened overseas?

In the US, Wall Street tumbled at open, with the S&P500 futures dropping 5 per cent, after the index lost more than 4 per cent on Friday.

With AAP.

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