February 28, 2020 / 1:14 AM / a month ago

Australian shares slide into technical correction as coronavirus spreads

* ASX 200 down ~10% for week, set for worst show since 2008

* Index hovers ~40 points above next support at 6,400

* New Zealand index slides 3%, down about 7.5% for week

By Rashmi Ashok

Feb 28 (Reuters) - The Australian sharemarket slid into correction territory on Friday and was headed for its biggest weekly fall since the global financial crisis amid mounting fears about the global spread of the coronavirus.

Governments from Iran to Australia shut schools, cancelled big events, stocked up on medical supplies and prepared emergency responses as new infections of the virus reported around the world surpassed those in mainland China.

The S&P/ASX 200 index tumbled as much 3.5% to 6,426.8 in early trade, following the trajectory on Wall St and other bourses overnight, and was hovering around that level by 0112 GMT.

The benchmark has slid 10.7% since its last peak a week ago, putting the market in a technical correction and on track for its biggest weekly fall since 2008.

“At this stage, there seems to be nothing to slow the downward momentum. If we do see further infections and further containment measures, it will have further economic impact,” said Michael McCarthy, chief market strategist at CMC Markets.

“The likelihood is, with more borders being shut and more trade being impeded, we’ll see further downward earnings revisions from companies and lower share prices.”

McCarthy said the ASX 200 index’s next major support level at 6,400 points might keep it afloat it in the short term but if breached, could trigger further falls.

As iron-ore prices tumbled, benchmark giants BHP Group and rival Rio Tinto slid over 4% each. Even gold miners were not spared, despite a rise in bullion prices to 7-year highs this week, with the sub-index shedding nearly 1%.

The country’s top lenders -Commonwealth Bank of Australia , Westpac Banking Corp, National Australia Bank and Australia and New Zealand Banking Group -all traded around between 3.4% and 4.2% lower.

With oil prices languishing at over a year’s low, energy stocks were also battered. Heavyweight Woodside Petroleum Ltd lost 5% while Santos gave up over 7%.

Of the index’s 200 stocks, just three traded in the black as of 0013 GMT.

New Zealand’s benchmark S&P/NZX 50 index plunged nearly 3% to 11,098.79, marking its fourth straight session of declines and set for a weekly drop of nearly 7.5%, its worst performance since the financial crisis.

Among top losers, retirement village operator Ryman Healthcare lost nearly 6% while dairy giant a2 Milk Company Ltd slipped as much as 5.3%.

Reporting by Rashmi Ashok in Bengaluru; editing by Jane Wardell

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