March 16, 2020 / 1:56 AM / 21 days ago

Australia mulls second stimulus package as market slumps on coronavirus, sources say

SYDNEY (Reuters) - Australia is considering a second round of economic stimulus, three sources familiar with the deliberations told Reuters, as Canberra accelerated efforts to contain the spread of the coronavirus that has now killed five people in the country.

Shoppers line up outside a Costco Wholesale store, following reports of coronavirus disease (COVID-19) cases in the country, in Epping, Melbourne, Victoria, Australia March 14, 2020 in this still image taken from social media video. Richard Sharman via REUTERS

Australia has recorded nearly 300 cases of coronavirus and authorities fear a rapid rise in the flu-like respiratory disease.

The spread of the virus has roiled global markets despite pledges of stimulus packages, including Australia’s plan to inject A$17.6 billion ($11.4 billion) into its economy.

Prime Minister Scott Morrison met on Monday with senior Cabinet officials to discuss a potential “scaling-up” of its stimulus package, three sources told Reuters.

But the prospect of further government support did little to support the share market, with the benchmark S&P/ASX index plunging 9.7% in a late sell-off, its the biggest one-day fall since 1987. The index is down 30% since Feb. 20.

Australia’s corporate regulator had earlier asked some participants in the equity market to limit the number of trades they execute each day by up to 25% after a huge spike in volumes last week.

The country’s central bank also pumped more money into financial markets and said it was ready to buy local government bonds to support the smooth functioning of the market while planning further policy measures later this week.

STATE OF EMERGENCY

After a 77-year-old woman and a 90-year-old woman died in New South Wales, Victoria state and the Australian Capital Territory (ACT) - home to the capital city of Canberra - declared a state of emergency that will give health officials sweeping powers.

The proclamations allow the Victoria state and ACT’s chief health officers to issue fresh quarantine orders to cover entire suburbs, businesses or professions if deemed necessary.

“These powers have never been used before,” Victorian Premier Daniel Andrews told reporters in Melbourne, the state capital of Victoria. “This I hope provides a clear sense about the unprecedented nature of this public health emergency, this really significant challenge.”

The Victoria state of emergency will run for four weeks, while the ACT declaration will be in force for at least a week.

Western Australia state declared a state of emergency on Sunday.

Nationally, Australia is tightening its borders, with Morrison on Sunday ordering everyone arriving from overseas to self-isolate for 14 days.

Australia has also banned non-essential social gatherings of more than 500 people, though this not apply for public transport, work or schools.

Scores of events have been canceled, including Anzac Day war memorial services in New South Wales state, which on Monday recorded 37 new coronavirus cases, its biggest one-day rise yet.

Many offices are asking employees to work from home and several leading universities on Monday shuttered for at least a week.

Australia’s parliament, which is scheduled to sit next week has also restricted access to visitors, while Morrison said lawmakers will be asked to limit the number of staff members that come to Canberra next week.

Home Affairs Minister Peter Dutton last week became the country’s highest ranking elected official to say he tested positive to the virus, while a senator from Dutton’s state of Queensland, Susan McDonald, said on Monday she had tested positive. Both said they were in isolation.

Hundreds of Australians have meanwhile begun stockpiling goods, from staples to sanitizers, clearing supermarket shelves.

The country’s biggest grocer, Woolworths Group (WOW.AX), said it would open exclusively for an hour in the morning from Tuesday until at least Friday for elderly Australians and people with disabilities.

Reporting by Colin Packham in Sydney, additional reporting by Renju Jose and Byron Kaye in Sydney; Editing by Lincoln Feast

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