Australia shares slide after U.S. Fed warns of extended economic weakness
* Australia unemployment data due later in the day
* NZ budget later in the day
* Jefferies cuts PT on CBA to A$45.00 from A$46.70
By Nikhil Subba
May 14 (Reuters) – Australian shares fell on Thursday as sentiment soured after the U.S. Federal Reserve warned of an extended period of economic weakness, while investors awaited domestic unemployment data due later in the day.
The SP/ASX 200 index fell 1.06% to 5,364.50 by 0043 GMT. The benchmark had firmed 0.35% on Wednesday.
Overnight, Wall Street’s three major indexes closed lower following Fed Chair Jerome Powell’s warning and his call for Congress to agree on additional fiscal support.
Powell pointed to uncertainty over how well future outbreaks of the virus can be controlled and how quickly a vaccine or therapy can be developed, and said policymakers needed to be ready address “a range” of possible outcomes.
Australia’s unemployment could see its biggest ever monthly rise because of coronavirus-led lockdown measures, according to a Reuters poll, which forecasts a loss of 575,000 jobs in April.
The heavyweight financial index dropped as much as 2.3%, dragged lower by the Big Four banks.
Jefferies cut price target on Australia’s largest lender Commonwealth Bank of Australia to A$45.00 from A$46.70 and slashed earnings estimates, citing the prospect of rising regulatory credit risks due to the COVID-19 crisis.
Energy stocks fell as much as 2.9% to hit their lowest since May 4, hurt by a fall in oil prices.
Santos shed over 4%, while Oil Search declined about 3.5%.
Meanwhile, New Zealand’s benchmark SP/NZX 50 index declined as much as 0.6% to 10,721.38.
New Zealand’s budget is due later in the day, with more fiscal support for coronavirus impacted businesses expected to be announced.
The top percentage losers on the New Zealand benchmark were Z Energy Ltd, down 2.63%, followed by Meridian Energy Ltd, losing 2.48%. (Reporting by Nikhil Subba in Bengaluru; editing by Uttaresh.V)