Share slump continues as ASX extends its losing streak to a seventh straight day_1

The Australian share market has tumbled in early trade, extending its losing streak to a seventh straight session.

By 11am (AEDT), the All Ordinaries index was down by 2.8 per cent to 6328 points, wiping off $56 billion in value from Australian listed companies.

Those loses come on top of around $240 billion that was lost on the local market last week.

Just five of the top 200 stocks were in positive territory, while all sectors were posting losses, led by resources.

Iron ore miner Fortescue fell heavily in early trade (-12pc), after a measure of activity in China's manufacturing sector plunged to a record low in February.

The company is also trading without rights to its latest dividend payment, exacerbating the falls.

"The market remains concerned about the lack of pick up in industrial activity in China," ANZ economist Adelaide Timbrell said.

"If there is no rebound by the end of the quarter, we suspect steel production, and thus iron ore demand, will be hit hard, putting further pressure on prices."

Gold miners were among the worst performers, with Silver Lake Resources (-11.2pc), Gold Road Resources (-11.4pc) and Resolute Mining (-9.3pc) losing ground as spot gold fell 0.2 per cent to $US1,581.85.

"Even gold's safe-haven status couldn't shield it from the selling," ANZ's Ms Timbrell said, noting a heavy fall in the precious metal on Friday.

"With gold up over 10 per cent since the start of the year, investors in the futures market appeared keen to liquidate some of those gains as the losses in equity markets increased."

Around the region, New Zealand's benchmark index had lost 3 per cent, while Tokyo's Nikkei opened 1.4 per cent weaker.

It follows the worst week since October 2008, in the midst global financial crisis, for the ASX and Wall Street.

The Dow Jones index lost 12.4 per cent over the week, or more than 3,500 points.

On Friday, the ASX 200 was down more than 10 per cent from its record high posted the previous Thursday.
Markets expect Reserve Bank to cut rates

Markets have now fully priced in a 25-basis-point rate cut by the Reserve Bank when its board meets on Tuesday.

US Federal Reserve chair Jerome Powell has said the central bank is closely monitoring the coronavirus outbreak and the implications for the economic outlook.

"We will use our tools and act as appropriate to support the economy," Mr Powell said.

JP Morgan chief economist Sally Auld said the fact that Fed officials are now actively discussing policy support, in addition to the downside risks to economic growth and financial markets pricing in the chance of a global recession, mean the case for the RBA to cut rates in March is clear.

"The [Reserve] Bank will be responding foremost to protect against the higher chance of global recession; officials' commentary in recent months has highlighted that global developments could be an important driver of policy outcomes in Australia," Dr Auld said.
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"While we are forecasting a 25bp cut tomorrow, we acknowledge that the chance of a 50bp cut is not small.

"The RBA are 50 basis points from the effective lower bound. In this context, conventional central bank wisdom suggests that the policy of least regret is to move quickly once it becomes clear that there are material downside risks to the modal forecasts for growth and inflation."

A second 25-basis-point rate cut is priced in by June.