Broad-based sell-off sends shares lower

Close The Australian share market has finished the day lower as fears about the sustainability of economic recovery sparked a broad-based sell-off.

At the close, the benchmark S&P/ASX200 index was down 35.9 points, or 0.8 per cent, at 4677.4, while the broader All Ordinaries fell 37.9 points, or 0.8 per cent, to 4676.9.

Among the sectors, materials fell 1.5 per cent, energy shares lost 1.3 per cent, but financials rose 0.2  per cent.

Macquarie Equities associate director Lucinda Chan said there were losses across all sectors, with weak durable goods numbers and a pullback in gold prices hurting some companies.

‘‘Clearly there is a question of whether it will be a quick recovery,’’ Ms Chan said. ‘‘The pullback is probably also (occuring) because there is a Jewish holiday in the US, so markets are going to be a bit soft and quiet.'’

She said the market regained some of its lost ground in the afternoon after being down 68 points in morning trade.

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The major miners had a poor day, with BHP Billiton down 45 cents at $37.10 and rival Rio Tinto off $1.33 at $58.65.

Big gold producers followed the price of the precious metal down, with Newcrest off $1.81, or 5.42 per cent, to $31.59, Newmont down six cents to $4.90 and Lihir Gold falling 12 cents to $2.83.

Eden Energy defied the share market gloom to rise 3.6 cents, or 45.6 per cent, to 11.5 cents, after it announced a deal with Origin Energy, boosting its plans to develop its geothermal interests.

Agricultural chemicals supplier Nufarm also had a good day, after it entered into a heads of agreement with Chinese state-owned chemicals trader Sinochem Corp.

The move could lead to a $2.8 billion takeover of Nufarm by Sinochem and Nufarm shares rose 82 cents, or 7.4 per cent, to $11.96.

‘‘The deal looks pretty good, it is quite positive and the price was quite reasonable,’’ Ms Chan said of the move.

She said comments from Reserve Bank governor Glenn Stevens to a Senate committee hearing were also well received by the market. Mr Stephens said the downturn in Australia had been mild and it remained to be seen whether official interest rates would rise before unemployment reached its peak.

Among banking stocks, ANZ rose 54 cents to $24.33, National Australia Bank was up 18 cents to $30.60 and Macquarie Group gained 7 cents to $57.06.

Commonwealth Bank fell 26 cents to $51.04 and Westpac lost 7 cents to $26.10.

‘‘ANZ had some good news today with a management announcement, plus also the IAG acquisitions giving a bit of a lift to that stock and some upgrades by some brokers,’’ Ms Chan said.

ANZ earlier said it had appointed Westpac’s former head of institutional banking, Philip Chronican, to lead its Australian operations.

Myer 'looks expensive'

Making news, department store operator Myer will have a market value of between $2.28 billion and $2.77 billion when it floats on the stock exchange in November.

''We're going to need to get a little bit more clarity on the book build and how that's going to go,'' said ABN Amro Morgans private clients adviser Todd Kerslake. ''It looks like their trying to get a little bit of a premium out of it. It looks too expensive.''

The retailer's private equity owners TPG and Blum Capital are ''trying to gear it up to be David Jones when unfortunately there's a clear difference between David Jones and Myer.''

Myer is probably more ''on the Kmart side of things than the David Jones end of things,'' Mr Kerslake said. ''Whether they can get the premium out of it, remains to be seen.''

Mr Kerslake said Myer's proposed float shows there was confidence coming back in the market, which is welcome news.

Energy stocks drifted lower as oil prices fell below $US66 a barrel. Woodside Petroleum was down 60 cents to $51.80 and Oil Search was off 28 cents, or 4.3 per cent, at $6.20.Santos dropped 23 cents to $14.77 and Origin Energy lost 13 cents to $16.02.

Retail stocks traded mixed, with up-market retailer David Jones rising 10 cents to $5.71 and Woolworths losing 18 cents to $28.96.

Wesfarmers was off 57 cents at $26.09 and Harvey Norman was down 14 cents at $4.19.

Media stocks also fell, with News Corp shares down 43 cents at $15.65 and the company’s non-voting scrip down 43 cents, at $13.29. Fairfax Media fell 2.5 cents to $1.66 and Consolidated Media fell four cents to $2.97.

The top-traded stock by volume was Baraka Petroleum, with 116.41 million shares worth about $673,000 changing hands. Its shares were up 0.1 cents, or 20 per cent, at 0.6 cents.

Preliminary national turnover was 2.47 billion shares worth $4.27 billion, with 408 stocks up, 668 down and 326 unchanged.

Market needs a break

The market ''is tired and wants to lie down for a while,'' said Morningstar head of equity Peter Warnes. He said the ASX200 could slip to around 4500 points.

''It wants a little bit of a pullback,'' Mr Warnes said.

''It's been running very strongly since March and it needs a pause to refresh,'' Mr Warnes said.

''A lot of value has come out of the market,'' he said. ''Given we're not in clear water yet, you don't want to go too far from home.''

Mr Warnes said retail investors may not seize on Myers shares, valued at between $3.90 to $4.90 as interest rates rise and job market stays weak.

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AAP with Chris Zappone, BusinessDay