Coronavirus impact to be felt in Australia as government braces for downturn in economic growth

Coronavirus impact to be felt in Australia as government braces for downturn in economic growth

The Australian government is bracing itself for a downturn in economic growth, after revealing the impact of coronavirus on the economy will be worse than the black summer of bushfires.

It’s predicted that the expected $5 billion budget surplus this year may not be possible as budget figure predictions were done a year ago, long before the coronavirus outbreak.

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The government is warning the economic impacts are fare broader than just the university sector and tourism – which contribute about $16 billion to the economy.

The building industry – with the closure of Chinese factories supplying product – manufacturing, exports and agriculture have all been hit.

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‘I don’t think the virus story is over yet.’

The International Monetary fund predicts the impact on the global economy from coronavirus would be about 0.1 per cent, after growth had already been downgraded.

Uncertainty of the virus has already wiped $82 billion off the stockmarket in the past two days but economists say it’s not all bad news.

Jobs, iron ore and coal prices and interest rates are still holding up well, meaning there’s still a chance of a surplus being delivered.

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US stock indexes have ticked slightly higher as investors dipped their toes in the water a day after worries about the worldwide spread of the virus sent the S&P 500 and the Dow Industrials to their biggest daily declines in two years.

Investors have been laser focused on the potential economic impact of the virus outbreak.

Protesters hold signs, rallying against a proposal to house former cruise ship passengers infected with a new virus at a Southern California complex. Credit: Mindy Schauer/AP

Iran’s death toll rose to 16 on Tuesday, the highest outside China, while dozens of countries from South Korea to Italy accelerated emergency measures.

Kenny Polcari, senior market strategist at SlateStone Wealth LLC in Jupiter, Florida said long-term investors were likely bargain hunting.

“Today is just a bounce back after yesterday’s very dramatic sell off,” he said.

“I don’t think the virus story is over yet. When it hits the United States there’s going to be another round of selling.”

Workers wearing protective suits spray disinfectant as a precaution against the coronavirus at a market in Bupyeong, South Korea. Monday, Feb. 24, 2020. South Korea reported another large jump in new virus cases Monday a day after the the president called for “unprecedented, powerful” steps to combat the outbreak that is increasingly confounding attempts to stop the spread. (Lee Jong-chul/Newsis via AP) Credit: Lee Jong-chul/AP

US stock indexes declined sharply in the past three sessions with fears of a pandemic knocking off more than 3.0 per cent on Monday after a flare-up in infections in several countries.

As of Monday’s close, the S&P 500 and the Dow Jones Industrials had erased their gains for the year.

Last week, positive fourth-quarter earnings and hopes of limited damage from the virus outbreak had pushed Wall Street to record highs.

At 9.59am local time, the Dow Jones Industrial Average rose 78.56 points, or 0.28 per cent, to 28,039.36, the S&P 500 gained 7.73 points, or 0.24 per cent, to 3,233.62 and the Nasdaq Composite added 39.19 points, or 0.42 per cent, to 9,260.47.

A carnival float, depicting a reveller laughing at the Coronavirus, waits for the start of the traditional carnival parade in Duesseldorf, Germany. Credit: Martin Meissner/AP

Of the S&P’s 11 industry sectors, communications services and technology were the biggest gainers, each rising about 0.5 per cent. Energy was the biggest laggard as oil prices dipped.

Shares of Dow-member Home Depot rose 1.8 per cent after the home improvement chain beat quarterly sales and profit estimates providing one of the biggest boosts to the S&P 500.

Department store operator Macy’s also fell 1.0 per cent even after a smaller-than-expected drop in quarterly same-store sales.

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HP gained 5.0 per cent after the company said it would step up efforts to slash costs and buy back stock, as it seeks investor support to defend against a $US35 billion takeover offer from US printer maker Xerox Holdings.

Among other stocks, Perrigo rose 5.0 per cent after the drugmaker gained the first US approval for a generic version of Teva Pharmaceutical Industries’ respiratory drug ProAir.

Mastercard shares fell 1.0 per cent after announcing chief executive Ajay Banga would step down at the start of the next year and be replaced by products head Michael Miebach.

Declining issues outnumbered advancing ones on the NYSE by a 1.21-to-1 ratio; on Nasdaq, a 1.13-to-1 ratio favoured decliners.

The S&P 500 posted 2 new 52-week highs and 15 new lows; the Nasdaq Composite recorded 17 new highs and 43 new lows.

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