Australia shares end at 3-week low, NZ drops as virus worries weigh

Australian shares closed at their lowest level in three weeks on Monday due to worries about a resurgence in COVID-19 cases across the world.

Investors moved away from riskier assets as Beijing, after weeks with almost no new cases, reported dozens of fresh infections in the past few days, and cases surged in the United States too.

"Reports of a new COVID-19 lockdown in Beijing speak directly to market fears that the measures taken to contain the virus so far are not enough," Michael McCarthy, chief market strategist at CMC Markets said in a note.

Denting sentiment further, Australia said it will run record budget deficits this year and next following spends on a big stimulus and infrastructure to aid its economic recovery.

The S&P/ASX 200 index ended 2.2pc lower at 5,719.8, its lowest close since May 25, 2020.

Financial stocks shed 2.3pc, marking their fourth straight session of declines, with the "Big Four" lenders falling in range of 1.5pc to 2.8pc.

Energy stocks dropped 3.4pc after oil prices weakened on virus-led demand concerns.

Shares of Woodside Petroleum Ltd and Santos Ltd shed 3.3pc and 3.9pc, respectively.

Material stocks fell, with a 2.3pc drop, marking their weakest close since May 29.

Shares of heavyweight miners BHP Group Ltd and Rio Tinto Ltd shed 2.1pc and 1pc, each.

Healthcare stocks dropped as much as 1.7pc to their lowest level since March 31. Shares of biotech company CSL Ltd lost 1.9pc.

But healthcare firm Healius Ltd surged 21pc to be the top percentage gainer on the benchmark after it announced the sale of its primary care business.

New Zealand's benchmark S&P/NZX 50 index fell 0.4pc to finish the session at 10,864.12.

The top percentage losers were Skycity Entertainment Group Ltd, down 4pc, followed by Heartland Group Holdings Ltd, losing 3.8pc.