Close The Australian sharemarket has ended lower, with financials taking most of the hit as market operator ASX Ltd gave up some of its gains from Monday amid doubts the merger with the Singapore exchange will clear regulatory hurdles.
The benchmark S&P/ASX200 index fell 22.2 points, or 0.5 per cent, at 4687.8, while the broader All Ordinaries Index lost 19.1 points, or 0.4 per cent, to 4761.5.
Among the sectors, financials shed 0.9 per cent, energy shares fell 0.6 per cent, while materials closed flat.
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- The dollar hovers above 99 US cents
- Asian shares slip, but near 28-month highs
- Oil trades little changed around $US82.50
- Gold inches down to $US1340 an ounce
- Dow futures are flat at 11,116
The market traded lower from the start as investors took profits after an $8.4 billion offer for ASX lifted shares to five-month highs yesterday.
Losses increased after politicians - whose approval for the ASX/SGX deal will be necessary - expressed concerns over the transaction, sending ASX shares down as much as 8.6 per cent.
The proposed merger between the Australian and Singapore stock exchanges requires the green light from Australia’s Foreign Investment Review Board, the Reserve Bank of Australia and the Australian Securities and Investments Commission.
ASX shares closed down 7.4 per cent, or $3.08, to $38.67, the biggest fall among the top ASX200 today, wiping out about one-third of yesterday's 19 per cent rally. ASX's market capitalisation is still about $600 million higher than before the bid.
SGX, meanwhile, is down a second day in Singapore trade, losing 3.2 per cent, after yesterdy's 6.2 per cent drop.
Taking a breather
Austock Securities senior client adviser and strategist Michael Heffernan said the market was taking a ‘‘breather’’.
‘‘A bit of profit-taking from the explosive performance of yesterday led by the surge in the ASX shares, which sort of petered out today with a bit of realism coming into the market that the takeover of the ASX is still some time off,’’ Mr Heffernan said.
‘‘CBA, Macquarie, NAB are all down over 1 per cent,’’ he said. ‘‘When you get that happening it’s clearly going to have a major downdraft on the index.’’
ANZ and NAB are due to release annual profit results this week, and Westpac releases its results next week. Commonwealth Bank held its AGM this morning.
Mr Heffernan said the results were expected to be ‘‘pretty strong’’, which should be positive for the market.
The big four banks finished weaker. Commonwealth Bank was the worst performer on the S&P/ASX 20, ending down 77 cents, or 1.5 per cent, at $50.18, after chief executive Ralph Norris said funding costs will remain high, possibly paving the way for interest rate rises outside of the central bank’s own.
National Australia Bank finished 26 cents lower, or 1 per cent, at $24.75. Westpac closed down 11 cents at $22.84 after announcing that its takeover of St George Bank had led to a contribution to annual statutory net profit of $685 million. ANZ finished 5 cents lower at $23.85.
The major miners closed mixed. BHP Billiton was up 9 cents at $41.83 while Rio Tinto was down 4 cents at $84.06. Fortescue Metals was 4 cents higher at $6.59.
Mr Heffernan said corporate activity in the mining sector has given a lot of confidence to the overall health of the market.
Perilya launches bid
In market news, lead and zinc miner Perilya has formally launched its $C184 million ($182.4 million) bid for Canada’s GlobeStar Mining Corporation. Perilya ended up 0.5 cents at 56.5 cents.
Energy and resource contractor WorleyParsons says it expects an improvement in earnings this financial year after a ‘‘disappointing’’ result in 2009/10. WorleyParsons ended down 83 cents, or 3.6 per cent, at $22.36.
Wealth manager Perpetual says it will consider de-merging its trustee business from its funds management operations in light of Kohlberg Kravis Roberts’ (KKR) $1.75 billion bid for the company. Perpetual closed steady at $37.90.
Listed health insurer NIB Holdings said it will continue to pursue merger and acquisition opportunities and is contemplating a return of capital to shareholders. nib closed steady at $1.255.
Oil Search said a dip in September quarter oil and gas production was offset by a marginally higher realised oil price.Shares in Oil Search ended down three cents at $6.49.
Global beverage firm Foster’s Group hopes to make a final decision on whether to demerge its wine and beer businesses by March or April 2011. Foster’s finished up 3 cents at $6.16.
Bendigo buys out Elders
Bendigo and Adelaide Bank will be the sole owner of Rural Bank after agreeing to buy out co-owner Elders remaining 40 per cent stake for $165 million. Bendigo closed down 11 cents at $9.01, while Elders was up 3 cents, or 4.5 per cent, at $6.95.
Surf wear retailer Billabong has forecast relatively flat earnings in 2010/11 as a stronger Australian dollar continues to place pressure on its bottom line. Billabong closed up one cent at $7.82.
Legal firm Slater & Gordon is set to buy NSW-based personal injury litigator Keddies Lawyers for $35 million. Slater and Gordon finished up 5.5 cents, or 3.1 per cent, at $1.82.
Gold miner Newcrest Mining closed down 6 cents at $40.56.
The top-traded stock by volume was OBJ Ltd, with 391.96 million shares worth $12.70 million changing hands. OBJ Limited closed up 1.2 cents, or 60 per cent, at 3.2 cents after it announced yesterday that global druggist GlaxoSmithKline would development its FIM technology.
Preliminary market turnover was 3.07 billion shares worth $5.63 billion, with 542 stocks up, 606 down and 365 unchanged.
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AAP, with BusinessDay