The week that was with Michael Pascoe
The end of an interesting week for markets with the odd wobble at home and abroad.
Close Australian shares slumped more than 2 per cent today, to post their worst monthly performance in more than a year, weighed by worries about the US economic recovery, prospects of an interest rate rise, and weaker commodities prices.
At the close, the benchmark S&P/ASX200 index was down 103.7 points, or 2.2 per cent, to 4569.6, its biggest one-day percentage slide since late November and bringing to lows not seen since November 5. The broader All Ordinaries index fell 100.8 points, or 2.1 per cent, to 4596.9.
Today's drop brings the two-week decline to almost 7 per cent, the worst result for stocks since the market's recovery began last March. This week's loss also makes it three weeks in a row of declines. For the whole of January, the ASX is down 6.2 per cent, the worst monthly performance since October 2008.
Among the major sub-indexes, materials were today down 3.4 per cent, financials lost 2 per cent, while energy stocks were off 1.9 per cent.
need2know:
- Asian shares weighed down by Greece worries
- The dollar slides to 89 US cents amid EU debt woes
- Oil tops $US74 on strong US GDP expectations
- Gold inches down to $US1083
- Dow futures are 20 points lower at 10,042
IG Markets research analyst Ben Potter said that the fact the ASX200 fell below 4600 "with such little resistance shows how negative sentiment currently is."
"In the final quarter of 2009, there were growing calls from market participants for a meaningful correction, which did not eventuate," he said. "We may be seeing this play out now, giving those that missed the boat last time an opportunity to enter the market.
"The market just seems to be in a bearish mood because good news on US earnings is being ignored and the slightest bit of negative news is jumped on."
Mining giants plunge
Market heavyweight BHP Billiton was down $1.30, or 3.2 per cent, at $39.40. The mining giant's shares got no lift from an announced $US1.93 billion expansion of its Western Australian iron ore business to lift production capacity to 240 million tonnes per annum in 2013. Fellow mining giant Rio Tinto backtracked $3.44, or 4.8 per cent, to $68.00.
‘‘There is no doubt the resources sector continues to bear the brunt of the weakness and Chinese domestic demand is what is driving that weakness,’’ CommSec equities analyst Savanth Sebastian said.
Mr Sebastian said the local market could begin February in the black on Monday if US economic growth figures on Friday night were positive.
‘‘Anything in the vicinity of 4.5 per cent (GDP growth) will bode well for the US economy ... and be ahead of expectations.
‘‘Also, the Chinese lending banks were effectively told to put off lending for January but February is a whole new month.’’
Among major banks, ANZ was down 42 cents at $21.73, Commonwealth Bank slipped $1.87, or 3.4 per cent, to $53.23, Westpac retreated 72 cents, or 2.9 per cent, to $23.86 and National Australia Bank was 32 cents lower at $26.37.
ERA boosted by sales
Making headlines today, Rio Tinto subsidiary Energy Resources of Australia has achieved a record full year earnings result on the back of higher revenue from uranium sales. ERA shares were up 7 cents at $20.95.
Macarthur Coal abandoned part of its multi-pronged transaction package with joint venture partner Noble Group but will proceed with a deal central to its growth plans. Shares in Macarthur weakened 81 cents to $9.45.
Among key energy stocks, Woodside was down $1.35 to $42.33, Oil Search eased 10 cents to $5.26 and Santos was 2 cents lower at $13.18.
Lihir Gold was down 12 cents, or 4.15 per cent, at $2.77, fellow gold miner Newcrest dipped 60 cents to $31.53, Newmont was 3 cents lower at $4.89 and AngloGold Ashanti rose 70 cents to $9.20.
Among retailers, Coles owner Wesfarmers was down 74 cents at $27.51 and Woolworths gave up 33 cents to $25.86.
The market’s top traded stock by volume was transport software group SmartTrans with 634.26 million shares changing hands worth $29.2 million. SmartTrans skyrocketed 3.3 cents, or 660 per cent, to 3.8 cents, after the company signed a memorandum of understanding with China Mobile.
Preliminary national turnover was 3.65 billion shares, worth $7.45 billion, with 273 stocks up, 909 down and 291 steady.
Sentiment soured
"The market was pricing in a very, very high rate of (global) growth both in terms of economic and earnings growth, and there are risks to the achievement of that growth," Credit Suisse equity strategist Atul Lele said.
"People are reacting to the policy uncertainty across a number of geographies," Mr Lele added.
Dealers said sentiment soured because a mostly positive earnings season in the United States has been overshadowed by worries about overheating in China.
Debt concerns from Europe also weighed on investor mood as Greece struggled to rein in its ballooning deficit and Portugal was warned by rating agencies to draw up a credible plan to cut its deficit.
At home, investor also weighed expectations that the central bank will hike its official rate by 25 basis points to 4 per cent on Tuesday, the fourth hike in as many meetings, as it cuts back monetary stimulus.
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AAP, with BusinessDay
