Michael Pascoe: The week ahead
The start of another week of major corporate results, a little testing of US market confidence and a whole lot more from the Reserve Bank.
Close Australian shares have closed more than 1.5 per cent lower as banks ended their recent price surge and big miners declined following weaker metal prices.
At the close, the benchmark S&P/ASX200 was down 72.6 points, or 1.6 per cent, at 4388.4, its biggest one-day percentage fall since July 1. The broader All Ordinaries dropped 67 points, or 1.5 per cent, to 4398.1. Losses accelerated in afternoon trade.
On a sector-by-sector basis, materials and financials fared worst, down 2.9 and 2.1 per cent, respectively. Industrials lost 0.8 per cent.
"There's definitely some profit taking and a bit of a sell-off today, which may be a healthy pause as we have seen some good gains over the past few weeks," said David Taylor, an analyst with CMC Markets.
need2know:
- Asian shares dropped, with China stocks losing 5 per cent
- The dollar fell below 83 US cents in growth-asset gloom
- Oil slipped below $US71 as recovery doubts grow
- Gold extended Friday's drop to trade near $US940
- Dow futures are 78 points lower at 9243
BHP Billiton fell $1.13 cents to $37.13, while rival Rio Tinto lost $2.89 to $57.10, after the price of copper, a benchmark industrial metal, for September delivery fell 2.7 per cent to $US2.836 a pound.
Fortescue added 13 cents to $4.58 after it said it agreed to a 35 per cent cut for iron ore it sells to Chinese steel mills, putting pressure on the bigger miners to reach an agreement in stalled talks.
"The price settlement appears to be a better deal for Fortescue than the Chinese mills," said DJ Carmichael analyst James Wilson.
CBA leads banking sell-off
Australia's major lenders lost ground, with Commonwealth Bank leading the sell-off after its stock went ex-dividend this morning.
Commonwealth Bank fell $1.72, or 3.7 per cent, to $45.30, ANZ declined 49 cents, or 2.4 per cent, to $20.25, National Australia Bank eased 67 cents, or 2.4 per cent, to $27.08, and Westpac gave up 52 cents, or 2.1 per cent, to $23.88.
But earnings announcements from Ansell, NIB Holdings and Newcrest Mining beat market expectations, which brought buyers into the market.
"Reporting season is getting into full swing now," said Sean Fenton, a fund manager with Tribeca Investment Partners. "This is a test for the market to see if it can keep going higher."
NIB soars on positive outlook
Shares in health insurer NIB Holdings jumped 11 cents to $1.05 after the group said underwriting profit in 2009/10 may rise as much as 24 per cent.
Rubber gloves and condom maker Ansell firmed 4 cents to $9.44 after it forecast earnings per share (EPS) in a range of 56 US cents to 62 US cents in 2009/10. That would be down from reported EPS of 66.3 US cents in 2008/09.
However, BlueScope Steel slumped 23 cents, or 7 per cent, to $3.07 after it reported an annual loss due to falls in export demand, sales and prices and said it expects further losses.
"Bluescope's result was slghtly dissapointing and its outlook commentary was a little conservative,'' Mr Walker said.
Newcrest Mining rose 50 cents to $29.65 after the miners said annual profit grew by 84.7 per cent after the price of gold rose and the company cut operating costs.
The share price of other gold miners declined as the precious metal's price slipped. Lihir fell 4 cents to $2.56 and Sino Gold lost 5 cents to $5.69.
Macmahon in takeover talk
Macmahon Holdings added 3.5 per cent to 60 cents on speculation major shareholder Leighton Holdings might want to make a bid for the mining services group.
Transfield Services Infrastructure Fund added 5 cents, or 5.3 per cent, to $1.00, after saying future earnings were underpinned by a strong portfolio of projects, despite reporting an annual net loss of $38.02 million.
The MAC Services Group fell 5.5 cents, or 3.4 per cent, after the mining services firm said it was continuing to eye acquisition opportunities after posting a 29.7 per cent jump in full year profit.
Mining services companies Ausdrill and Brandrill will merge under a scrip deal that values Brandrill at $45.2 million and gives Ausdrill an entry into the coal market.
Ausdrill slumped 9 cents, or 6.5 per cent, to $1.29 while Brandrill surged 24 per cent, or 1.6 cents, to 8.2 cents.
Infigen Energy jumped 10 cents, or 8.2 per cent, to $1.325 as the firm, formerly known as Babcock & Brown Wind Partners, appointed advisers to begin a sale process for all or part of its US business.
V Australia is ramping up its international operations by launching direct flights to Phuket and Johannesburg. Shares in Virgin Blue lost one cent to 37 cents.
Bounty Oil & Gas was the most traded stock by volume, with 151.7 million shares changing hands for $9.65 million. Its shares gained 3.1 cents, or 67 per cent, to 7.7 cents.
Market turnover was 2.6 billion shares worth $5.01 billion, with 488 stocks up, 655 down and 306 steady.
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AAP, with BusinessDay
