The week that was with Michael Pascoe
Michael Pascoe tries to channel RBA governor, Glenn Stevens. Must see video!
Close The Australian sharemarket slumped 2.4 per cent to close at a three-month low, with $31 billion wiped from the value of stocks as investors worried they had been overly optimistic about the pace of global economic recovery.
Global stocks and commodity prices tumbled on reports of rising debt levels in European nations and an unexpected jump in the number of Americans filing for unemployment benefits.
The benchmark S&P/ASX200 index fell 107.3 points, or 2.3 per cent, at 4514.3, while the broader All Ordinaries index lost 111.4 points, or 2.4 per cent, at 4532.7.
The benchmark index fell for the fourth straight week, its worst run since mid-2008. It has fallen 8.9 per cent in the last four weeks, wiping about $110 billion off its value, but traders said they saw value in stocks and a rebound was due next week.
"Our guys think there is good value in a lot of stocks. If you were waiting for a correction to buy, then this could be the time," said Chris Kimber, client adviser at Bell Potter Securities.
Mr Kimber said he hadn’t seen many selling orders at his firm,
suggesting it was overseas fund managers and institutions that were
getting out of Australian stocks. (Read Mal Maiden's comment on the sharemarket woes.)
need2know:
- Asian stocks fall to near 5-month lows
- The dollar plunges to 86.4 US cents
- Oil inches above $US73
- Gold hovers near 3-month lows
- Dow futures are 20 points higher at 9999
Among the local sectors, materials and energy stocks both plunged 3.7 per cent today, while financials shed 2.2 per cent. Health was the only sector to post gains, rising 0.7 per cent.
Miners slump
BHP Billiton, the biggest stock on the local exchange, fell $1.44, or 3.5 per cent, to $39.55 and rival mining giant Rio Tinto slumped $3.52, or 5 per cent, to $66.60.
Most other miners also declined after metals prices dropped overnight. That included the gold miners, with Lihir falling 12 cents, or 4.2 per cent, to $2.74 and Newcrest losing 82 cents, or 2.6 per cent, to $31.15. The local spot price of gold was $US1064.10 per fine ounce, down $US44 on Thursday’s close of $US1108.10.
Energy stocks slumped after the price of oil fell on the dismal US jobs news and a lower than expected draw down on natural gas supplies dimmed hopes for stronger energy demand.
Woodside Petroleum fell $1.68, or 3.9 per cent, to $41.52, Oil Search dropped 29 cents, or 5.3 per cent, to $5.16 and Santos slipped 56 cents to $13.20.
Rate rises ahead
Mr Kimber said the Reserve Bank of Australia’s quarterly statement on monetary policy was important because it reminded people that interest rates would keep rising this year.
‘‘I thought it was a pretty big statement,’’ he said. ‘‘They basically said they would have rates at 4.5 per cent by the end of the year.’’
The RBA warned in its statement that interest rates may rise further as it modestly upgraded its core inflation forecasts for this year and 2011.
Westfield was the worst performer on the day among the top 50, dropping 74 cents, or 5.7 per cent, to $12.20 after going ex-dividend. Macquarie Group was the second worst, losing $2.98, or 5.6 per cent, to $50.23, followed by Fortescue Metals, which dropped 26 cents, or 5.5 per cent, to $4.51.
The major banks also contributed to the market decline, with ANZ falling 52 cents, or 2.4 per cent, to $20.90. Westpac fell 52 cents to $22.61, National Australia Bank was 56 cents weaker at $25.31 and Commonwealth Bank declined 28 cents to $52.67.
Bucking the trend were some healthcare stocks, with CSL rising 43 cents to $31.55. Sonic Healthcare gained 15 cents to $14.43 after the pathology and radiology services provider continued its European expansion, acquiring Belgian laboratory chain Medhold Group for an undisclosed sum.
Foster's scores Corona extension
Also making gains were Foster’s Group, which added 5 cents to $5.60. The beverages giant today renewed its contract to distribute Corona locally, the top-selling import beer in Australia.
Electronics and homewares retailer Harvey Norman fell 10 cents, or 2.7 per cent, to $3.62 after it reaffirmed guidance for a big lift in first-half profit after reporting a 4 per cent increase in sales for the same period.
Airport owner MAp Group was steady at $2.92 after it said Brussels Airport recorded a 14 per cent drop in annual earnings but forecast improving traffic levels at the Belgium gateway this year.
Mirvac Group lost 4 cents, or 2.6 per cent, to $1.485 after it confirmed that valuations of its property assets declined by three per cent in the first half of 2009/10.
Windfall for Biota
Biota lost 9 cents to $2.03 after the anti-infective drug developer said it expected royalty income of $56.7 million from its flu drug Relenza in the first half.
ResMed jumped 35 cents to $6.34 after the sleep management company said it was well positioned for the future after booking a 42 per cent rise in first-half net income.
The most-traded stock by volume was Monitor Energy, with 131.3 million shares worth $657,997 changing hands. Its share price fell 0.1 cent, or 16.7 per cent, to 0.5 cent.
Preliminary market turnover was 3.2 billion shares worth $6.23 billion, with 167 stocks up, 1,087 down and 250 unchanged.
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