Market ‘panic’: ASX facing darkest days
The Australian share market has tumbled more than 2 per cent at the open as the deadly coronavirus spreads across the planet and stifles trading prospects.
Last week's loss of nearly 10 per cent was its fourth greatest fall since 1980 and inspired worrying comparisons with two of the worst crashes over that time - the market had only lost more during the 1987 Black Monday crash and the beginning of the Global Financial Crisis in 2008.
After the local market closed on Friday, Wall Street suffered heavy losses.
This was expected to result in a continual slide when the markets opened on Monday, compounded by the spike in coronavirus cases over the weekend and its true impact through the release of poor Chinese economic data.
The S&P/ASX200 index was down 140.4 points, or 2.18 per cent, at 6,300.8 at 1015 AEDT while the broader All Ordinaries index plummeted 147.3 points, or 2.26 per cent, to 6,364.2 points.
The Ausstralian dollar was also hit, buying 64.69 US cents, down from 65.22 US cents when the market closed on Friday.
"It looks like it's going to be another hard week for the ASX," Burman chief investment officer Julia Lee told news.com.au.
She said the comparisons to the '87 and '08 crashes puts the current "panic" into perspective.
Crunching numbers: Here are all the times the Australia market fell more than 10% in a week from 1980-2020:— Julia Lee (@JuliaLeeAU) February 28, 2020
1. & 2. October 1987: Stockmarket crash
3. October 2008: after Lehman’s collapse
And maybe for the 4th time.. February 2020: Covid-19 pic.twitter.com/oPBanDjwar
"It's more the speed at which the market's adjusting to the economic implications of the coronavirus.
"At the moment it does look like the severity (of the deadly virus) is worse than what the market expected and its duration is unknown."
The market slide comes just weeks after the ASX200 was at all time highs, which should present some profitable options for mum and dad investors.
Ms Lee says it's important to remember volatility is normal for stock markets.
"What we have seen in the past is it is an opportunity for longer term investors who can keep their cool," she told news.com.au.
"But the problem is we don't know how long this is going to go for.
"My base case scenario is that we start to see better news flow coming through by April.
"When we see falls of more than 2 per cent in one session it can be quite scary but it's also quite normal.
"I went back 11 years and crunched all the times the Aussie market has fallen more than 2 per cent and on average it's about seven times a year.
"When I see volatility hit, my general rule of thumb is that we can expect it to generally stay about two or three months.
"About six or eight weeks after it started, my strategy is to slowly start accumulating stock."