Shares set to fall amid fears about pandemic

THE Australian stockmarket is set to start the week in negative territory as fears grow about the global economic impact of the coronavirus.

ASX futures were down 27 points to 5972 points on Sunday, pointing to a decline in the benchmark ASX 200 when it opens on Monday.

The Dow Jones Industrial Average dropped 0.7 per cent to 26,469.89 at the close of trade on Friday, the S&P 500 shed 0.6 per cent to 3215.63 while the tech-rich Nasdaq Composite Index lost 0.9 per cent at 10,363.18. European markets also fell sharply.

CommSec chief economist Craig James said Wall Street had been affected by concerns the number of coronavirus cases was growing in the US.

He said that negative sentiment that was likely to flow on to the local market, with early indications the ASX 200 could drop as much as half a per cent on Monday.

Mr James said rising USChina tensions also had hurt investor confidence after Beijing ordered the US consulate in Chengdu to shut in retaliation for the closure of its own Houston mission.

The move comes amid escalating tensions between the two countries over the coronavirus and China’s crackdown on Hong Kong.

Mr James said data released this week was likely to show a big drop in the size of the US economy due to the coronavirus shutdown.

“There could be a drop of as much as 33 per cent in GDP in the June quarter,” said Mr James.

“The good news is that is likely to only be temporary and there will be a bounce back.”

On the local front, new figures on consumer price inflation, jobs and private sector credit were likely to give investors an idea of how the Australian economy was managing the coronavirus pandemic, Mr James said.